Bank of Queensland share price falls
BIRMINGHAM: The Bank of Queensland share price has fallen significantly after announcing a now almost-completed $275 million capital raise to the market last week. First it was Westpac and now it's the Bank of Queensland (ASX: BOQ) tapping the capital markets.
Like Westpac: the Bank of Queensland just recently announced that it was looking to raise $275m in new capital - split between a fully-underwritten $250m placement to institutional investors (now completed) and another (yet to be finalised) $25m from a share purchase plan (SPP) to eligible investors.
Unsurprisingly and just like Westpac - BOQ's shares also fell steeply once the stock resumed trading post-raise trading halt. The day prior to the announcement of this raise, for example, the Bank of Queensland shares traded hands at the $8.640 mark. A trading halt wouldn't slow matters much, nor see bearish investors obstructed: once the stock opened after the completition of the institutional placement, it dove to a low of $8.070 per share during the day. Since then the stock has managed to fall further, with BOQ currently trading at $7.780 per share - some 9.9% lower than they did prior to the cap raise announcement. Practise trading Australian bank stocks with an IG demo account now
The Bank of Queensland articulated two primary reasons for the $275m capital raise. Specifically, it was noted that the funds would be used to: ' Strengthen BOQ's balance sheet, provide an increased buffer above the Australian Prudential Regulation Authority's (APRA) "unquestionably strong" Common Equity Tier 1 (CET1) capital ratio benchmark and create additional capacity for BOQ to implement its strategic priorities.' After all, as part of the bank's FY19 results, it was noted that BOQ's Common Equity Tier 1 ratio stood at 9.04% - somewhat below APRA's 'unquestionably strong' requirement. In saying that and speaking of the outlook, BOQ noted during its FY19 presentation that the bank remained appropriately capitalised. Indeed, as was further explicated, 'the Offer is expected to add approximately 80 to 88 basis points to BOQ's Level 2 CET1 capital ratio.'