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HSBC in £12.5bn fund raising plan HSBC in £12.5bn fund raising plan
(40 minutes later)
Europe's biggest bank, HSBC, has confirmed it is seeking to raise £12.5bn ($17.7bn) from shareholders through a new rights issue. Europe's biggest bank, HSBC, has confirmed it is seeking to raise £12.5bn ($17.7bn) from shareholders through a rights issue in the UK.
HSBC chairman Stephen Green said in a statement that the cash raised would help to deal with the impact of an uncertain economic environment. HSBC chairman Stephen Green said the cash raised would help the firm to deal with the impact of an uncertain economic environment.
The news came as HSBC revealed pre-tax profits for 2008 of $9.3bn (£6.5bn), down 62% on the previous year.The news came as HSBC revealed pre-tax profits for 2008 of $9.3bn (£6.5bn), down 62% on the previous year.
The bank has been hit by losses in the US sub-prime mortgage market.The bank has been hit by losses in the US sub-prime mortgage market.
In North America, HSBC reported a loss of $15.5bn and said it planned to close the majority of its consumer lending business in the US. In North America, HSBC reported a loss of $15.5bn and said it planned to close the majority of its consumer lending business in the US. This is expected to result in the loss of about 6,100 jobs.
However, it said that it remained "committed to the US". However, it said it remained "committed to the US".
HSBC admitted the banking industry had done many things wrong. Inappropriate products were sold inappropriately by many, it said. WHAT IS A RIGHTS ISSUE? Companies issue extra shares to raise moneyThey are offered to existing shareholders, usually at a discount to the current share priceShares are offered in proportion to existing holdings, so if you own 10% of the old shares you are offered 10% of the new ones
Group chief executive Michael Geoghegan said in his review: "2008 was a very difficult year for the financial sector, and 2009 will be no less so, as the global downturn intensifies." HSBC has issued the cash call in an attempt to shore up its balance sheet.
It is offering just over 5 billion shares at 254 pence each - a price that is 48% lower than Friday's close of 491.25p.
In the UK, HSBC has not sought any financial help from the government.In the UK, HSBC has not sought any financial help from the government.
Last April, Royal Bank of Scotland announced a similar plan, asking its shareholders for £12bn.
However, last week it announced a record loss of £24.1bn for 2008, and will now receive an additional £13bn from the taxpayer.
No executive bonuses
HSBC admitted the banking industry had done many things wrong. Inappropriate products were sold inappropriately by many, it added.
In a statement, Mr Green said the bank intended to "play our part in rebuilding public trust in our industry".
He confirmed that no executive directors would receive any cash bonuses for 2008, nor would any performance share awards be made for the year.
HSBC said 2008 had been a very difficult year for the financial sector, and it expected 2009 to continue to be challenging.