Tough global regulations make bank seek £3.2bn rights issue from its shareholders

The London-listed bank said the rights issue was to ensure it was well prepared for incoming Basel III rules, which will force banks to more than double the spare cash they hold to prevent a repeat of the financial crisis.

Standard Chartered is one of the sector's strongest banks, but the firm said it was "prudent" to plan for even stricter capital requirements and the possibility they may come in sooner than initially thought. The rights issue will also mean it does not have to sacrifice growth ambitions to meet Basel III.

The bank said it made record profits and income in the third quarter and for the first nine months of the year. Income in the third quarter rose faster than in the first-half and trading levels were almost back to levels of before the financial crisis, it said.

Standard Chartered wants "to continue to seize opportunities across Asia, Africa and the Middle East," it said, adding that the new capital rules could constrain its asset growth unless new cash is raised.

"It's to safeguard the bank's ability to grow, to take advantage of the opportunities in our markets while also meeting the anticipated changes in the regulatory world," said chief executive Peter Sands. He dismissed suggestions the cash will be used for a big deal, such as in South Africa. "This is not a war chest for acquisitions," he said.

The bank said it would offer shareholders the right to buy one new share for every eight shares held at a price of 1,280p, a steep 33 per cent discount to Tuesday's close.

Its shares yesterday dipped 1.7 per cent to 1,876p, a fall of 32.5p.

Regulators, seeking to prevent a repeat of the global credit crisis, agreed last month to force banks to increase the amount of top-quality capital which they must hold in reserve.

The bank's core tier one capital ratio of nine per cent at the end of June was comfortably above the new global minimum of seven per cent. The rights issue will raise that level to about 11 per cent, although that would dip to 10 per cent after applying a higher risk weighting to its assets under the new Basel rules.

Standard Chartered, which derives more than three quarter of its profits in Asia, also raised 1.8bn from shareholders at the height of the financial crisis.