Asia-focused bank Standard Chartered (STAN.L) launched a $5.3 billion ($7 billion) rights issue to bolster its finances for new capital rules and provide the firepower to take advantage of growth opportunities, it said.

 

The bank said it made record profits and income in the third quarter and for the first nine months of the year. Income in the third quarter rose faster than in the first-half and trading levels were almost back to levels of before the financial crisis, it said.

 

Standard Chartered wants “to continue to seize opportunities across Asia, Africa and the Middle East,” it said, adding that the new capital rules could have constrained its asset growth unless new cash was raised.

 

“It’s to safeguard the bank’s ability to grow, to take advantage of the opportunities in our markets while also meeting the anticipated changes in the regulatory world,” Chief Executive Peter Sands said on a conference call.

 

He dismissed talk the cash will be used for a big deal, such as in South Africa, which has been rumoured. “This is not a war chest for acquisitions,” he told reporters.

 

The offer -- the third-biggest rights issue this year after Deutsche Bank (DBKGn.DE) and UniCredit (CRDI.MI) -- should be well supported by investors and sent a signal that Britain and some other countries may apply tougher capital rules than the new global standard, analysts said.

 

“Clearly the message is that the UK regulator may be accelerating the Basel III implementation timetable,” said Joseph Dickerson, analyst at Execution in London.

 

Regulators, seeking to prevent a repeat of the global credit crisis, agreed last month to force banks to increase the amount of top-quality capital which they must hold in reserve.

 

Standard Chartered, based in London but deriving over three quarter of its profits in Asia, follows Deutsche Bank (DBKGn.DE) in raising capital due to the new rules, after the flagship German lender this month raised 10.2 billion euros ($18.5 billion), partly to lift capital. 

 

By 1400 GMT StanChart’s London shares were down 1.6% at 1,878 pence, valuing the bank at 39 billion pounds. Its Hong Kong-listed shares (2888.HK) closed down 1.3% at HK$227 ($38.1).

 

StanChart said it would offer shareholders the right to buy one new share for every eight shares held at a price of 1,280p, a steep 33% discount to Tuesday’s close.

 

The bank’s core tier one capital ratio of 9% at the end of June was comfortably above the new global minimum of 7%. The rights issue will raise that level to about 11%, although that would dip to 10% after applying a higher risk weighting to its assets under the new Basel rules.

 

"Basel regulations will be difficult for some Western banks and they want to jump ahead of the line in raising capital before some of the European banks do that," CLSA analyst Daniel Tabbush said.