HBOS placing falls £110m short

THE disgruntled response to the HBOS placing has led to the bank raising at least £110m less than it had hoped. The group said on Wednesday that it would raise about £1.37bn in new money from the sale of its shares but it became clear today that the figure would be £1.26bn at most.

Book-runner Cazenove placed 150m shares at 740p each, a discount of 8% to Wednesday's opening price. The broker was parking a further 22.5m shares with institutions but, even when these are sold, the total raised will be no more than £1.26bn. HBOS said: 'Things have moved on since yesterday. You can never be precise. We are very happy with the deal.'

Cazenove and helpers Dresdner Kleinwort Wasserstein and Lazards will pocket £18m for selling the shares. The placing was the fourth largest attempted in the London market, behind HSBC, Royal Bank of Scotland and Vodafone. All of theirs were acquisition-related while HBOS said it needed the money to fund organic growth.

But City analysts and investors said the bank had enough money and they could not understand why it needed more. The discounted price at which institutions were prepared to buy shares may have also been affected by a shortage of ready cash in the investment community.