HSBC in $18 billion rights issue, retreats from U.S.

By Steve Slater and Myles Neligan

LONDON (Reuters) - HSBC launched Britain's biggest rights issue, raising 12.85 billion pounds ($18.1 billion) on Monday to help it overcome big losses in the United States and exploit the woes of weaker rivals.

Europe's biggest bank said it would shut most of its U.S. consumer lending business, cutting 6,100 jobs, but that it was ready for acquisitions in its traditional stronghold of Asia where many banks are pulling out to focus on core markets.

HSBC is selling 5.1 billion shares at 254 pence each, a 48 percent discount to Friday's close, in a fully-underwritten 5-for-12 rights issue. Its shares closed down 19 percent at a 10-year closing low at 399 pence.

"It's always difficult for a market that's feeling jittery to absorb 12.5 billion of new stock," said Jane Coffey, head of equities at Royal London Asset Management, which is HSBC's 24th largest shareholder according to Thomson Reuters data.

"I am not surprised the stock is down but they are doing the right thing and we are going to support the issue."

The stock has halved in value since Lehman Brothers collapsed in September but HSBC has outperformed peers due to its traditional balance sheet strength.

Its share price fall ranked it as the world's fourth-biggest bank, just behind JP Morgan Chase, with a market value of just over $70 billion.

Several investors told Reuters last week they would support a rights issue, and Monday a top 10 investor, who asked not to be named, said the cash call would provide the bank with greater flexibility.