Westpac raising AU$3.5B via rights issue

  • 14/10/2015
Westpac raising AU$3.5B via rights issue

Westpac Banking Corp is raising AU$3.5 billion (NZ$3.80B) in a rights entitlement offering to strengthen its capital reserves to meet new regulatory requirements.

The Australian Prudential Regulation Authority in July lifted the mortgage risk weights of the country's top banks to bring their capital reserve levels in line with the world's top financial institutions.

Australia's second largest lender also reported preliminary results for 2015, with cash earnings for the year up three percent to AU$7.8B. Statutory profit for the year rose six percent from last year to AU$8B.

Westpac New Zealand cash earnings rose eight percent to AU$851 million, or a gain of six percent in New Zealand dollars. Revenue rose 7 percent, driven by 7 percent growth in lending, 5 percent increase in deposits, and a four basis point rise in margins.

Westpac's one-for-23 renounceable entitlement offer will comprise of an institutional and retail portion.

The institutional offer will be completed by October 15, with a shortfall bookbuild scheduled on October 16. The retail offering will open on October 23.

The shares will be priced at AU$25.50 each, implying a discount of 13.1 percent on the dividend adjusted theoretical ex-rights price.

Westpac shares, which closed at AU$30.44 on the ASX yesterday, were placed in a trading halt shortly before the announcement.

Australia's big four banks have raised a combined AU$17B in fresh equity since May this year, to boost capital reserves.