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Banks at forefront of Australia's share-sale boom

Hong Kong

AUSTRALIAN banks are topping up share sales in a rush to bolster their capital, lifting additional offerings in the nation to their highest level in four years.

Companies and shareholders have raised US$16 billion through additional offerings this year, the highest since 2015, according to data compiled by Bloomberg. With a few weeks to go before year end, another US$800 million of proceeds would bring the 2019 tally to a 10-year high.

Bank of Queensland Ltd raised $171 million this week, selling shares at the top of a marketed range. The sale was intended to strengthen the lender's balance sheet, with an expected boost of 88 basis points for its Level 2 CET1 capital ratio.

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Westpac Banking Corp sold US$1.4 billion of shares earlier this month, as the lender sought to increase its buffer above the regulatory capital ratio benchmark. It was the country's biggest share sale this year.

Yet Westpac's sale may not be enough, analysts say. The lender may need to raise more funds to pay for a possible A$1 billion (S$926.5 million) fine that stems from allegations of money-laundering law violations, they say.

Earlier this year, National Australia Bank Ltd and Macquarie Group Ltd each raised A$1 billion selling shares.

Dragged down by banks, the S&P/ASX 200 Finance Index has dropped 5.6 per cent this quarter as the worst performer among sub-gauges of Australia's benchmark. Finance is also the weakest sector on a year-to-date basis.

Despite booming additional sales, Australia's total IPO value is heading for a six-year low after a spate of pulled deals. Initial offerings have raised US$4.1 billion this year, down by a third from the same period in 2018, data compiled by Bloomberg show. BLOOMBERG