Europe's biggest bank is suffering in the credit crunch, year-end 2008 figures have revealed.
HSBC is to tap shareholders for extra funds through a record £12.5 billion rights issue.
Plans for the cash call were officially announced alongside the bank's year-end results for 2008, which revealed a fall in profits of 62 percent. HSBC's net income for the year stood at £6.5 billion.
These results stand in contrast to those from other banks, which have been much harder hit by the credit crunch. Last week, HBOS, now part of the Lloyds Banking Group, announced an annual loss of £11 billion, while RBS said that it had taken a UK all-time record £24 billion hit over the year.
Both of these banks have been bailed out by the government in the form of large equity stake purchases over recent months, with Lloyds now 45 percent and RBS 70 percent publicly owned. HSBC has not participated in these rescue schemes and remains privately-owned.
A key motivation for raising fresh capital when other banks are struggling would be to give HSBC extra financial muscle with which to buy up low-priced businesses from rivals. Additional cash would also put the bank in a better position to weather the financial downturn, which looks likely to be prolonged throughout 2009.
HSBC, headquartered in London, is Europe's biggest bank. It had previously announced a 28 percent fall in profits in half-year (January-June 2008) results.
Investors signalled their disapproval at the announcement by sending HSBC shares down by over 20 percent on the FTSE 100 today. The index itself also touched six-year lows.
