Underwriters mop up unwanted HBOS shares

Underwriters were left picking up nearly two thirds of unwanted new Halifax Bank of Scotland shares today after investors spurned the group’s £4bn (€5bn) rights issue.

Investment banks Morgan Stanley and Dresdner Kleinwort will take up 62.18% of the shares placed under the fundraising scheme after failing to garner support from investors.

HBOS said shareholders bought just 8.29% of the heavily discounted stock offered under the scheme to help bolster the group’s balance sheet.

The underwriters confirmed the sale of a further 29.53% of new shares at a price of 275p after placing the so-called “rump” of unsold stock on the market today, with sub-underwriters buying 131.2 million shares.

But Morgan and Dresdner will now pick up the tab on £2.6 billion worth of the new shares after a 6% fall in HBOS shares today – to below the 275p offer level - hit investor appetite.