HSBC announces 62% fall in profits


HSBC it is to tap up shareholders to the tune of £12.5 billion after announcing a 62% plunge in profits.

Europe's biggest bank has issued a statement explaining that it needs the cash to soften the blow of the uncertain economic climate.

In what will be Britain's biggest ever rights issue, HSBC will offer 5.06 billion shares at 254p each, which is a 48% discount from the bank’s Friday's 491.25p close.

HSBC is the latest big company to seek shareholder aid. The bombshell came as it unveiled a 62% plunge in pre-tax profit of £6.5 billion for 2008 - which included a goodwill impairment charge of £7.4 billion.

The bank has been particularly hard hit by the collapse of the US sub-prime mortgage market.

HSBC's full-year dividend has also been cut by 29% to $0.64 per share. Its outlook for 2009 remains bleak, with the bank predicting a tough year ahead. It also announced the closure of its ailing US consumer loans business.

In Hong Kong, trading in HSBC's shares was suspended for Monday's session ahead of the announcement.

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