Shareholders approve HBOS rights issue

by Gill Montia

Story link: Shareholders approve HBOS rights issue

HBOS’ £4 billion rights issue has secured the backing of the majority of its shareholders.

The bank has been forced into its cash call by writedowns from the credit crisis.

The fundraising has already encountered problems in the form of volatile share movements, which have been attributed to traders short-selling and resulted in an inconclusive investigation by the Financial Services Authority.

The bank’s share price has dipped below the issue price of 275p on several occasions since the fundraising was announced, despite the issue price being discounted at 45% on the market price of 495.75p the day before the fundraising was announced, in April.

However, existing shareholders now have the opportunity to increase their stake in the UK’s leading mortgage lender, which has a large number of small shareholders because it was formed from the demutualisation of Halifax building society in 1997.

As uptake from this group may be low, HBOS is providing a free service to some small investors who will be able to sell their “rights” to other potential investors.