Wary HBOS raises capital

HBOS overnight disclosed it will follow the lead of HSBC and RBS and raise capital to repair its balance sheet. There's no mention of any sale of its businesses, though (such as BankWest in Australia).

HBOS said it will undertake a fully underwritten rights issue to raise £4 billion, though the share sale requires approval at a shareholder meeting in June. The British bank will also cut the dividend payout ratio to 40 per cent.

While announcing another £2.8 billion in write-downs, HBOS said trading conditions and the trading performance of the group "has been satisfactory, despite the challenging conditions."

HBOS said in the trading update that it "continues to invest in the growth of our international businesses particularly in Australia and Ireland, balancing short-term profit with the delivery of longer-term growth.

"Our international businesses are trading well but are not immune from the dislocation in global financial markets and, again, some deterioration in the credit environment is to be expected."