Bring us up to speed
HBOS toiled to only 8.29 per cent of its targeted £4bn rights issue as many shareholders decided not to back the company. As a result, Morgan Stanley and Dresdner Kleinwort, the lead underwriters, are attempting to offload 1,375 million HBOS shares, worth £3.7bn in total, on to the market. The failure did little to improve the confidence in an ailing sector. Share prices remained solid on Monday, largely due to promising results posted by US banking groups.
The media reaction?
'Disappointing', 'shareholder snub' and 'flop' were the words of the week as the press went to town on HBOS' failure. Nationals made much of the fact the funding failure was the highest profile rights issue turkey since the stock market crash of 1987 saw underwriters saddled with most of a £7bn share issue by oil giant BP.
Who are the PR players here?
HBOS handles its PR in-house and was quick to scotch rumours the Cardew Group had been brought in to aid the failing issue. Group communications general manager Shane O'Riordain and head of media relations Paul Fincham head the HBOS comms team. The firm said it had no plans to bring in external help, despite its current comms woes.
Implications for other banks
Confidence in the sector is low and decreasing, although HBOS shares did not slip in any catastrophic way on Monday when the failure was confirmed. But RBS and Bradford & Bingley have both announced funding attempts. They will have to work even harder to convince shareholders to further invest.
8.3% - Percentage of $4bn rights issue taken up