Capital

Suncorp (SUN) CEO John Mulcahy has announced that, after six years leading the group, he will step down from his current role – at the same time as the group slashed its profit forecast and unveiled a capital raise of up to $1.302 billion. The shares were placed in a trading halt at A$7.13 yesterday, which compares with the underwritten part of its offer at $4.50 apiece to raise $900m – a 37% discount. The group said it could also raise a further $402m via an offer to retail shareholders.

Commonwealth Bank (CBA), the largest bank in Australia, defends its highly ranked executives in breach of disclosure rules during the issue of $2 billion capital raising. CBA disagreed by saying that, rules were not broken when it warned a small group of shareholders regarding the bad debt raise before a public announcement. The bank said that the information was not materially significant so there was no need to warn the public earlier.

As a result of the economic slowdown, many companies in the recent past have announced capital raising programs. About 28 companies in the first half of 2008 and 49 companies since June have increased their capital and majority of them managed to stabilise their balance sheets. This was not the case in the recent years as balance sheet stabilisation was not a big portion of companies.

Australia’s third largest banking corporation, Westpac (WBC) has decided to raise its capital by A$2.5 billion through a share sale on Tuesday, to strengthen its balance sheet due to the acquisition of St George Bank (SGB), which does not have a sound lending books and raise in bad debt charges. This move follows a capital raising by National Australia Bank (NAB) last month.