Mortgage News and Halifax Monday, 28th April 2008

Industry sources said Halifax is drawing up plans to raise up to £5bn of fresh money with a rights issue.
HBOS, which owns the Halifax and Bank of Scotland brands, will admit this week that losses from the credit crunch have spiralled to almost £4bn.

A final decision on whether to issue shares has yet to be taken by its board of directors.

But sources say that HBOS is highly likely to follow rival Royal Bank of Scotland which last week announced plans to raise a record £12bn.

HBOS may be forced to make an announcement as early as this morning to confirm to the stock market it is considering a rights issue.

However, sources say it will probably not make a final decision until tomorrow, when the bank is due to hold its annual general meeting in Glasgow.

Analysts believe HBOS's finances are still relatively strong, and do not think that there is any danger the company could go bust. However, many think it would be prudent for the bank to bolster its cash reserves.

The freeze in the money markets has hit HBOS particularly hard. As a mortgage lender it relies on borrowing from other financial institutions to fund its loans.