Standard Chartered 'preparing to launch rights issue'

13 October 2010

Standard Chartered is set to launch a rights issue in an attempt to raise additional capital.

Inside sources told the Financial Times that the move could be officially announced sometime this week, with Standard Chartered looking to bring in between £5 billion and £7 billion ($7.9 billion and $11 billion).

The intention of the issue is to protect the UK-based bank from new global capital rules requiring financial institutions to hold a minimum tier one capital ratio of seven per cent.

While the bank's ratio stood at nine per cent at the end of June, it wants to pre-empt the full impact of the rules, which are set to be introduced gradually between now and 2019.

Last month, Jean-Claude Trichet, president of the European Central Bank, said the new legislation will bring about long-term stability for the banking sector.

"The transition arrangements will enable banks to meet the new standards while supporting the economic recovery," he added.

By Claire Archer

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