CBA is likely to ask shareholders for $5 billion today

Commonwealth Bank CEO Ian Narev. Photo: Getty Images.

The Commonwealth Bank is set to announce its full year results this morning. Market expectations are that a new benchmark will be set with a profit for the year of $9.1 billion.

But, as Chris Pash highlighted in his preview of this morning’s CBA results, “the news the market will be looking for is what Australia’s biggest home lender will be doing to meet APRA’s stricter capital rules.”

Most pundits expect CBA boss Ian Narev to deal with the issue of a Commonwealth Bank capital raise directly this morning. So, news today in the Fairfax press that Narev has persuaded his board to agree to a $5 billion capital raise won’t take too many people by surprise.

Fairfax reports:

“Ian Narev and chairman David Turner have agreed to launch a $5 billion to $5.1 billion rights issue, which would offer every existing shareholder one new share for every 23 they already owned.”

Crucially, given last week’s price action after the ANZ capital raise and following on from last night’s more than 200-point fall in the Dow, Fairfax says the shares “would be priced at a 10 per cent discount to the theoretical ex-rights price.” – cba 12082015

That’s a long way below the current price and is likely to put downward pressure on the CBA price and the ASX 200, if correct.

You can read more here.

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