Standard Chartered

“Please sir, I want some more.” If capital is the new gruel, investors have just given Standard Chartered an Oliver Twist-like cuff around the head. Shares in the UK-listed bank fell 8 per cent on Tuesday after it completed a surprise £1bn equity placing. This bold request, for unspecified purposes, was as unexpected as last November’s £1.8bn rights issue. Then, shortly after saying it did not need to, StanChart raised cash to bolster its capital base. Nine months later, it has returned to the trough. Yet the bank seems to be on a roll: half-year profits rose 10 per cent to a record $2.8bn, and its dividend is up the same.

One possibility is that John Peace, the new chairman, has called for a precautionary offering to plug a looming capital hole. A doubling of the bank’s bad debt charges suggest as much. Yet StanChart’s investment bankers, like their peers, made up for weakness in the bank’s more traditional lending businesses by churning out bumper results. Instead, the new cash appears to be to fund growth. There may be some small acquisitions – such as Royal Bank of Scotland’s Chinese and Indian units. More than that, though, StanChart wants to fund organic growth as its Asian clients wake up after an economic power-nap. With its tier one capital ratio rising to 8.4 per cent, in line with Asian peers, that is fair enough.

Overall, the bank’s investment case remains intact. Its Asian orientation has helped it weather the crisis better than UK peers. Its stock price has also more than doubled since the March trough. It therefore makes sense to take some money off the top. Investor displeasure may have knocked StanChart’s shares 7 per cent below where they should trade after allowing for dilution. That is a small price to pay for sticking one’s neck out.END

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• Standard Chartered unveils surprise £1bn placing as profits rise (telegraph.co.uk)