The bank remains in a strong position, meaning that shareholders should participate in the new sale - according to one adviser.
HSBC remains in a good financial position and investors should take advantage of the bank's new cash call, an adviser said today.
The firm announced year-end profits of £6.5 billion yesterday, 60 percent down on 2007. It also announced the launch of a UK-record £12.5 billion rights issue, which will offer shareholders new stocks in the bank in order to raise revenue.
Investors appear to have taken this move to shore up the balance sheet as a signal that HSBC's finances have been damaged by the credit crunch. The bank's shares lost over 20 percent of their value on the FTSE 100 yesterday.
Nick Raynor, investment adviser at The Share Centre, said that there seemed to be little cause for concern. "The size of the rights issue is bigger than expected but investors shouldn't be worried," he commented. "HSBC is in a good position, compared to others in the banking sector."
"We are advising investors who can afford to take up the rights issue to do so. The City has fully underwritten and supported the rights issue so investors should be confident in joining them."
Last week, RBS announced that it had suffered a £24 billion loss in 2008. HBOS and Lloyds TSB - which merged into the Lloyds Banking Group in January - declared an £11 billion loss and an 80 percent dive in profits respectively.
