EYES will be on Standard Chartered today following suggestions that the Asia-focused bank is ready to launch a rights issue to raise up to £7bn so it complies with new capital rules.
Standard Chartered had a core tier one capital ratio of nine per cent at the end of June, which is within the new Basel III capital requirements of between seven and nine per cent.
However, a tough application of the new rules, which will be fully in force by 2019, could see the bank’s capital judged differently and its cash buffer deemed below the threshold.
Standard Chartered would become the second European bank to raise cash following the Basel III agreement last month. Deutsche Bank announced a €10bn (£8.8bn) rights issue in September to bolster its core capital holding and fund its acquisition of Deutsche Postbank.
It was unclear last night whether Standard Chartered would similarly use a slice of the funds it raises to extend its reach, though speculation has been rife in recent weeks that the bank itself is vulnerable to takeover attempts.
The bank earns four-fifths of its profit in Asia, making it a potential platform for expansion into the continent for acquisitive rivals.
London shares in StanChart gained 38.5p to close at £19.09 in heavy trading yesterday following talk of JP Morgan’s interest in buying a stake.
Analysts suggested that Standard Chartered could deploy a “fat man strategy” by bulking up its own assets to make itself unattractive to a bidder.
The Financial Times reports today that the bank’s planned rights issue could raise between £5bn and £7bn.
Standard Chartered already has a market capitalisation of £39bn, and profit in the six months to July of nearly £2bn.
A spokesperson for Standard Chartered declined to comment last night.