10 Dec 2008

Westpac seeks at least $A2.5bn in capital

8:30 am on 10 December 2008

Australian bank Westpac is raising more capital to shore up its balance sheet as it faces higher provisions for bad debt and looks to bed down its merger with St George.

The bank is seeking at least $A2.5 billion by issuing shares to institutional and individual investors.

The new shares are valued at $A16 each, an 11% discount to Monday's closing price.

Westpac says the money will boost its capital reserve ratio to 8.3%, and used to pursue growth opportunities within its expanded operations.

The bank says the jump in bad debt provisions include topping up those related to failed companies, Allco and ABC Learning, and one corporate downgrade.

However, Westpac says its overall performance has been sound in the last two months, with overall trends in earnings remaining consistent with those in the second half of the last financial year.