HSBC funds call drags Footsie down

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The bank's call on investors for a UK record £12.5 billion to prop up its finances triggered a wave of selling as confidence took a fresh battering - wiping £49.7 billion off blue-chip stocks.

The Footsie tumbled below 3665 - the low hit last October at the height of the banking crisis - to levels not seen since March 2003. Shares closed at 3625.8 - a fall of 5.3%.

HSBC wants the extra cash to shore up its finances after unveiling bad debt provisions totalling a mammoth £17.5 billion. The bank said pre-tax profits had slid to £6.5 billion in 2008 and announced plans to close its troubled US consumer lending business.

The heavily-discounted rights issue surpasses the £12 billion fundraising exercise carried out by the Royal Bank of Scotland nearly a year ago before the bank was forced into state support.

HSBC has so far avoided calling on the taxpayer for cash and chairman Stephen Green said he is "determined that HSBC should maintain its signature financial strength".

Top directors saw their overall pay packets plunge last year after bonus payouts for 2008 were axed, their annual report showed.

Chief executive Michael Geoghegan's package fell from £3.54 million to £1.67 million, while chairman Stephen Green's overall compensation fell by almost two-thirds to £1.27 million. But the firm also bore the scars of a tumultuous year for the banking sector in the severe blow to its profits, and lowered its dividend payouts.

HSBC's decision to run down its US consumer lending operation is an embarrassing blow to the group's strategy after it spent billions on the Household business in 2003.

The bank, which lends to consumers under the HFC and Beneficial brands in the US, will cease taking new loan applications and close branches as soon as possible - with the loss of 6,100 jobs.