Released on: July 24, 2008, 12:06 am

Press Release Author: Gracy

Industry: Financial

Press Release Summary: HBOS bankers faced a tough situation as its share offering almost flopped forcing the underwriters to try to sell shares worth 3.8 billion pounds which are presently under cloud.

Press Release Body: London (longdogfinance) July 23, 2008: An emergency fund-raising spree by HBOS, the biggest home-lender in Britain, has almost failed in the wake of just 8.3 percent shares being sold. This pessimistic behavior has left the market analysts puzzled about the possible ramifications for the over all economy.


In the rights issue, two of the leading underwriters, Morgan Stanley and Dresdner Kleinwort, could sell just 1.2 billion pound worth leftover or the so called \'rump shares\'. They are now faced with the problem of disposing off remaining stock worth 1.3 billion pounds.


In the 11th biggest-ever fund raising rights issue, HBOS raised 4 billion pounds. But due to this troubled fund-raising endeavour the investment banks are left with largest blocks of shares since the times when the oil major BP\'s privatisation failed right in the middle of stock market crash about two decades ago.


To muster up financial courage against the background of bleak economic conditions, HBOS is the biggest European bank to go for capital raising to mend its balance sheet. But unfortunately, its shareholders bought just 124 million shares because the market price of these shares went below the offer price which was 275 pence. All this happened against the backdrop of British banks\' gloomy prospects as the over all economy faltered.


\"The obvious reason (for the low demand) is the shares spent much of the time leading up to cut-off under water,\" Richard Hunter, head of British equities at the brokerage Hargreaves Lansdown told, adding, \"But it\'s also investors taking a view on the UK property market, which is a decision for the steeliest investors given where we are ... there\'s a risk aversion.\"

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