Standard Chartered prepares for Basel III with rights call

13th Oct 2010 07:02

Standard Chartered, the emerging markets focused bank, is preparing for stricter capital requirements for banks with a £3.26bn rights call.The company intends to issue the shares at 1280p on the basis of 1 new share for every 8 held.The board believes that the new Basel III banking arrangements will see regulators raise requirements relating to minimum capital ratio levels and they may accelerate the transition timetable. The funds from the issue will enable the company to accommodate such increases without having to constrain risk weighted asset growth.Temasek, the company's largest shareholder, intends to take up its rights. The issue has been fully underwritten.In a trading update the company said income in the third quarter was above the first half run rate.In what the company's chief executive, Peter Sands, described as "another strong performance", the company maintained momentum in both the Wholesale and Consumer sides of the business.In Wholesale Banking client income remains the key driver of growth, accounting for around 80% of the division's income, with high teens growth for the first nine months of 2010 on the comparable period last year.Transaction Banking remains strong with income ahead of the run rate in the first half and with continuing growth in average volumes in both Trade and cash..Financial markets volumes have grown strongly in 2010, achieving double digit percentage growth, though spreads have been tighter.Corporate Finance also continues to perform well and maintains a strong deal pipeline.Credit quality in the Wholesale Banking portfolio remains good. 'Early alert' indicators have continued to improve throughout 2010 and are not showing any particular concentration by geography or industry, the company said. The loan impairment charge in the third quarter was, as expected, low.In the Consumer Banking division year to date income has grown at broadly the same rate as in the first half of the year.Mortgage income fell slightly in the third quarter over the first half run rate, with pressures remaining on margins.Wealth Management fees, Small & Medium Eterprises, and Credit Cards and Personal Loans are all showing an improving trend with income in the third quarter ahead of the first half run rates.The third quarter loan impairment charge has continued to fall and was below the run rate seen in the second quarter of the year."Business activity levels across our markets are continuing to increase, with trade volumes almost back to pre-crisis levels. Standard Chartered is benefiting from these trends and continues to be well placed to service the needs of its clients and customers," claimed Sands.