Rights Issue
The document discusses the costs and benefits of rights issues versus other forms of capital raising for banks. It provides details on why banks are raising capital, including improving leverage, recapitalizing balance sheets, funding growth, and meeting Basel II requirements. It then examines sources of capital such as equity financing through placements, rights issues, and open offers. The advantages of rights issues for existing shareholders are outlined, but disadvantages like high costs and dilution effects are also discussed. Alternatives like sovereign wealth funds and asset sales are mentioned. Overall rights issues are concluded to be the best method when large quantities of capital are needed and market conditions hamper debt raising.
