HBOS raises £750m in new capital

by Gill Montia

Story link: HBOS raises £750m in new capital

HBOS has made it clear that it thinks the credit squeeze if far from over by raising £750 million in new capital.

The bank acted quickly last week, when the US Federal Reserve and other central banks announced plans to inject further cash into the money markets, to stem the deterioration in the availability of credit.

Andy Hornby, HBOS’s chief executive, is well known for his views on the dangers of the credit crunch and has taken the opportunity to raise the capital despite the fact that his bank has a strong balance sheet.

His actions were, to say the least, timely because the collapse of US investment bank, Bear Stearns, followed within 48 hours, raising fears of a global banking crisis.

However, HBOS, which is the UK’s largest mortgage lender, has borrowed at an interest rate of almost 9.5%, which is around 3.50% higher than the rates its mortgage customers are currently paying.