Considering the words "share issue" was used at its annual meeting yesterday, Bendigo and Adelaide Bank escaped the now usual market pounding reserved for groups seeking to raise money in the current febrile environment.
GPT sank yesterday, for example, when it came out of a trading halt that saw the shares stuck at $1.15 (itself a low). They plunged to as low as 62c yesterday before rebounding a touch to finish at 77.5c, still down a massive 32.6% after plans were revealed to raise at least $1.6 billion.
In contrast, Bendigo and Adelaide (soon to be shortened to Bendigo Bank) in a re-branding) saw its shares finish down just 7c at $13.11, after touching a low of $12.50 in the early morning sell-off.
Yesterday’s annual meeting was held jointly in Bendigo and Adelaide and chairman, Robert Johanson told shareholders that a new fund raising will soon be announced, probably in the "next few days".
The bank is believed to be looking to raise up to $150 million.
He said Bendigo would undertake the issue of hybrid shares and was looking at underwriting a dividend reinvestment program.
Banking analysts suggest that using these measures Bendigo had capacity to raise between $100 million and $150 million.
A press statement issued to the ASX said the bank was considering "an issue of convertible preference shares to finance its growth and further strengthen its balance sheet by replacing maturing subordinated debt.
He said the bank was looking at raising capital through a hybrid non-innovative tier one instrument.
“In due course we will consider underwriting our dividend reinvestment plan and to place shares as opportunities arise.
“In all of this, where possible, we will give every opportunity to our existing shareholders to participate and shareholders will receive a priority in any hybrid issue.”
Mr Johanson told the meeting the merger between Bendigo and Adelaide banks was making good progress. "We will need to raise more capital to finance our growth," Mr Johanson told shareholders at the company’s annual meeting yesterday held simultaneously in Bendigo and Adelaide.
Bendigo raised $90 million in an issue to shareholders last May.
"This bank has always been well capitalised and that was a strategic decision," he said.
"Australian banks are now competing with banks that have been recapitalised often by governments," the chairman added.
Mr Johanson said current conditions in financial markets were "very difficult and dangerous" and Bendigo will underwrite its dividend reinvestment plan this year.
He said much of offshore banking had "been already nationalised, the implicit government guarantee for deposits has become for much of the world explicit, differentials for credit quality will be much wider, capital flows will change and consumption patterns will alter.
“Activity based on financial engineering will reduce. Banks will hold more of the assets and liabilities of the community on their balance sheets. Credit will not grow at the unsustainable rates that the system had become used to over the past decade. Banks will be better capitalised.”
"In this Bank we have much to be proud of in the way our staff has dealt with the crisis.
"Immediately the implications started to become apparent, we implemented a very disciplined approach to lending. We concentrated on our retail funding base.
"We worked with our customers including those from Adelaide Bank who perhaps had not been used to the kind of relationship that Bendigo looked to build.
"We took advantage of any wholesale opportunities that presented themselves but we did not rely on them. Some parts of the business have had to deal with a lot of change. For example our margin lending book declined from about $5 billion to $3 billion in line with the decline in share market prices.
“In all that we have incurred $4 million in losses which is a regrettable but tiny amount.
"Our Leveraged Equities business is a very well run, conservatively managed business. The team has worked extremely well under a lot of stress and we thank them. Our customer numbers continue to grow and when the markets recover, as they will, we will be well placed."
CEO, Rob Hunt said the bank had moved over the last year to put its balance sheet in the strongest possible position.
He told the AGM that 74% of the balance sheet is now funded by retail deposits which is an "outstanding" level compared to other Australian banks.
Loan arrears levels were at "historically low" levels, he said.
