Monday, Jun 23, 2008
HBOS shares being openly shorted
BBC Business: HBOS share price dealt new blow
A £4bn call for cash by HBOS has come under more pressure after the banking giant's shares dropped beneath the rights issue asking price. Existing shareholders can buy at a "discount" price of 275p per share - but they fell 4.3% to 270.5p. The drop came after a US hedge fund revealed that it had "shorted" the firm's shares - essentially betting that they would fall in value. Under new rules investors in this position must declare their interest. Analysts said that the share price had also been dented as a result of investment bank UBS predicting that HBOS would see mortgage arrears continue to rise into the second half of next year.
Posted by jack c @ 07:47 PM (514 views) Add Comment
4 Comments
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1. icarus said...
In its war against shorters will the FSA try to prevent analysts from making pessimistic forecasts about companies (or maybe only major banks) going for rights issues? Maybe it will call such forecasts 'rumours'.
2. paul said...
This is getting interesting. The FSA has been foisted on its own petard (sorry to use the phrase for the second time this week).
By telling analysts to come clean about short positions, they've all crept out of the woodwork to give their negative outlooks, sending the price lower! What a disaster.
HBOS has the FSA to thanks for this fiasco - that's what comes of letting the market go when its going up and meddling when its on its way down!!
3. it_is_going_with_a_bang said...
This is something which may well cause more problems than it was intended to fix.
All rather amusing.
4. Rental John said...
See http://www.guardian.co.uk/business/2008/jun/24/bradfordbingleybusiness.banking