HBOS confirms £4bn rights issue

HBOS has confirmed plans to launch a £4bn rights issue in an attempt to shore up its capital, it was revealed this morning.

The UK’s biggest mortgage lender says shareholders will be offered two new shares for every five existing shares priced at 275p.

The bank says it has taken a write-down of £970m against assets held in its trading book in the past year.

Andy Hornby, chief executive at HBOS, says: “We are planning for a more challenging environment ahead and the proceeds of the rights issue should ensure that we benefit from strong ratios even if the macro-economic environment deteriorates further.”

Despite these challenging conditions, the group reports what it calls a satisfactory trading performance.

The announcement from HBOS follows the move from Royal Bank of Scotland last week, which also sought to raise cash from its shareholders to the tune of £12bn.