Halifax Bank of Scotland’s £4 billion investor cash-call came under further pressure after share price falls sent the stock back down to within sight of the discounted offer price.
A second day of share price woes, following Thursday’s seven per cent decline on further write-downs and bad debt warnings, saw HBOS shares drop another three per cent at one stage to less than 10p above the 275p being offered to investors.
HBOS yesterday sought to reassure that trading was “satisfactory”, but earlier news of £1 billion in write-downs and the potential for rising bad debts amid a worsening outlook for house prices sent the stock tumbling.
HBOS warned that property prices were now set to fall by nine per cent this year – a near-doubling of its previous estimate.
A number of analysts yesterday cut price and earnings targets for the bank amid expectations of heightened bad debt pressure.
The bank has been keen to stress that the rights issue is on track, but the latest declines cast doubt over the level of investor appetite.
If demand is low, the banks underwriting the rights issue could be left with substantial share holdings to shift with the potential for hefty losses.
HBOS investors are set to vote on the scheme next Thursday, with a July 11 deadline for shareholders to confirm their interest, assuming the rights issue is approved.
HBOS shares have more than halved since the beginning of the year alone.
The stock slid below 275p this month, but recovered last week after the Financial Services Authority proposed new rules for short-selling during rights issues.