Banks are offering continuously new shares. Many people have lost a lot of money in this financial crises. Funds both home and foreign are also suffering because they had invested in banks. Now the big question is, are there still buyers who are interested in new bank shares?
The answer is yes. This year banks, insurance companies, etc. have sold new shares for the amount of 228 billion dollar. Remarkably is the fact that 68 of the biggest banks in the world sold on their own for 128 billion dollars of new shares. For 20 of those banks it’s didn’t remained to one time of capital raising.
Joe Morford, bank analyst at RBC Capital Markets, thinks a lot of other banks will have to raise their capital. Otherwise they would not survive this crises.
A negative point for the banks could be the fear investors have at the moment. Investors are very cautious to invest in the financial market. So the sale of bank shares could stagnate and the capital raising could fail.
In my opinion, the capitals raising of banks are necessary. But people won’t continue buying their shares. Many people have lost a lot of their saving money and they are anxious to take another risk. Maybe funds will continue buying bank shares in hope the financial crises soon will be over. In the meantime banks have to survive and they must hope the crises will end soon so they could regain the confidence of private investors and funds.
source: http://www.forbes.com/wallstreet/2008/10/08/banking-capital-stocks-biz-wall-cx_lm_1008banks.html
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I think this is really good for the banks that there are still people buying bank shares. A lot of people are affraid of buying bank shares now because of de low value and the difficult market situation. But banks really need the extra capital in order to maintain their capital position, but also to stay out of luiqidity and solvency problems.
I also think that it's a good thing that they raise their capital. They have to do it if they want to survive and to keep the investors confident.
It's true that many people have lost a lot of money and that they are scared to lose some more, but I think that now is the time to buy because the shares are very low.
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