The Standard Chartered Bank today morning announced a rights issue that is to commence on 9^th October - exactly 1 week from today - and end on 26^th October making the total period 3 weeks. This is the second Rights Issue the bank has had, with the first being held in 2010 where the rights were oversubscribed, and they seek to raise KES 3.2 billion. The aim of this finance sourcing is to increase their capital base.

“Our overall objective has always been to build a long-term, sustainable business in Kenya. In order to achieve this, we have over the years focused relentlessly on the basics of banking; liquidity and capital management, credit risk management, cost control, efficiency and customer service.” said the Bank's CEO Richard Etemesi.

He went on to explain that, the aim of this financing is to provide additional capital to enable Standard Chartered Bank support its strategy as well as ensure that it is in a sound position to meet any impending regulatory changes that may incorporate a raise in banks’ statutory capital requirements. To achieve this, the bank has offered 22,082,856 new shares, each selling at KES 145, a 30% discount from the share’s closing price on  1^st October of KES 205.

The discounted price acts as a floor by indicating the lowest value the shareholders can expect the price to hit after the rights issue. This estimate is notably within the range of the lowest the shares have hit this year in January, where the stock traded for KES 142.49. A quick look at the NSE a few hours ago shows that this company announcement caused fluctuations in the share price with the value ranging from KES 203 – KES 210. The Rights Issue will be on the basis of One (1) New Share for every Thirteen (13) Existing Shares. Only those who held shares on closure on 19 September 2012 will be eligible to take part in this rights issue.