Standard Chartered in £1.8bn Rights Issue

Asian bank Standard Chartered has announced a £1.78bn rights issue to shore up its capital, but the UK-listed company has not taken part in any rescue package. The bank said the rights issue will reinforce its balance sheet in such turbulent times but will also help it to take advantage of emerging opportunities such as possible acquisitions.

Singaporean sovereign wealth fund Temasek, the company’s largest shareholder, is intending to participate in the offering and is also underwriting the rights issue alongside JP Morgan, UBS and Goldman Sachs.

According to the bank the rights issue price of 390p per share is a discount of 48.7% to its closing price on 21 November. Shares in the FTSE 100 stock fell by more than 3% as of 8am this morning.

Peter Sands, Standard Chartered chief executive said: “Economic growth within the key core markets of Asia, Africa and the Middle East is clearly slowing down largely as a consequence of the global financial crisis and the sharp economic slowdown in the West. However, although these economies are not immune to the challenges and uncertainties emerging from the global financial crisis, in general their economic and financial fundamentals are resilient and their near term economic growth rates appear likely to remain well above those of markets in the West.”

Meanwhile US financial Citigroup has accepted a $20bn capital injection from the US Treasury in return for preferred shares. It has also received approval for a $306bn government guarantee on real-estate related loans on the group’s books. Citigroup, which has seen its shares fall by some 60% in recent weeks, said it intends to issue an incremental $7bn more in preferred stock to the Treasury and the Federal Deposit Insurance Corp (FDIC) as payment for the government guarantee.

As part of the rescue package, Citi can not pay a quarterly common stock dividend exceeding $0.01 (one cent) per share for three years and must get government approval on an executive compensation plan, including bonuses. Citi, which has already announced some 75,000 in job cuts worldwide, said it remains committed to streamlining its business.

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