As a parade of American and other banks have illustrated over the 18 months of the global financial crisis, in many cases a bank must first raise the capital required to avoid a breach in its capital ratios before it can own up to the otherwise obvious truth that its lending losses are climbing rapidly.Suncorp finds, or found, itself in this boat, and yesterday put in place steps to sell $900 million in new shares, and potentially a further $402 million to be sold to retail investors (though recent retail share sales by Bank of Queensland and also to some extent Westpac have struggled for support).In one measure of Suncorp's weakened capital position the group said its "ACE" ratio, or one version of measuring core capital, would be 3.9 per cent as of December 2008 and below the target of 4.5 per cent to 5.0 per cent.The capital raising will lift the ACE ratio to 6.0 per cent and the tier one ratio to 10.9 per cent from 8.8 per cent.The deterioration in the Australian and world economies, and particular weaknesses of Suncorp's own banking model - mainly too much high-end construction lending and a naïve expansion into corporate lending - means that Suncorp is now managing what may be the worst percentage of dud loans of any retail or commercial bank.Suncorp said it expects the full year bad debt expense for the year to June 2009 to be in the range of between 100 and 130 basis points, which is three times the level of the bad debt expense used in a market update in the last week of November. Suncorp said this expense includes the provision, raised only recently, for its share of loans to Babcock & Brown, and also an "economic overlay".The bank expects no growth in receivables over the year to June 2009, taking into account the run-down in select property lending and commercial lending portfolios.Unlike in the last trading update, Suncorp did not spell out the growth, or decline, in receivables in each lending segment.Asset growth may also be slight in the 2010 financial year, or receivables may even decline.The bank said it would focus on its "core" banking businesses that appear to be home loans, small and medium business, agribusiness and smaller scale property developments (mainly developers well known to the bank).Suncorp said it was "on track" to achieve a rise in pre-provision, pre-tax earnings for the bank in the "high teens". After provisions, but before tax, Suncorp expects to report a banking profit of between $90 million and $100 million.Repricing of loans to restore margins, mainly for business borrowers, is thus working for the bank even though it may be irritating customers who won't be sharing in much of the notional reduction in the cost of funds to banks thanks to looser monetary policy.John Mulcahy, the bank's managing director, will leave Suncorp once the board hires a new CEO. It's likely this person will come from outside the group.While Suncorp insists there is