Global banking major Standard Chartered on Wednesday said it planned to raise about £3.25 billion ($5.20 billion) through a rights issue for business expansion in emerging markets and shoring up its capital base.
“Standard Chartered on Wednesday announces a rights issue to raise about £3.25 billion,” the U.K.-based bank said in a statement.
The banking entity said the rights issue would enable StanChart to continue to seize opportunities across Asia, Africa and the Middle East and focus on its organic growth strategy.
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It will also help it meet proposed Basel III norms. The new Basel III rules announced last month by the Basel Committee on Banking Supervision will require lenders to raise their reserves of top-quality capital, known as core Tier I, to 7 per cent of their risk-bearing assets by 2019. At present, the core Tier I requirement is 2 per cent. StanChart plans to offer one share for every eight shares held by investors at 1,280 pence each, translating into a 33 per cent discount against their closing price of 1,908.50 pence on the London Stock Exchange on October 12. The rights issue is being underwritten by JP Morgan Cazenove, Goldman Sachs International and UBS Investment Bank. StanChart which derives most of its income from emerging markets like Asia, Africa and the Middle East is listed in London, Hong Kong and India.
The bank had suspended trading of its shares at the Honk Kong Stock Exchange prior to the announcement.