HSBC shares dip on capital raising talk: dealers

People walk past the head office of HSBC bank in Mumbai in this November 20, 2008 file photo.

LONDON (Reuters) - HSBC Holdings (HSBA.L) shares dipped over 3 percent on Tuesday as talk swirled it could have to raise up to $14 billion to rebuild capital, dealers said.

By 3:42 a.m. EST HSBC shares were down 3.2 percent at 701 pence, underperforming a 1 percent decline by the broader European bank sector.

HSBC declined to comment. It has said in the past it is comfortable with its capital position and regards itself as one of the best capitalized and liquid banks in the world.

Dealers said the talk spilled over from Asia, where analysts at CLSA said HSBC appeared likely to be the next bank to raise capital, and could raise $14 billion.

"HSBC stands out more than the others... especially given its loan emphasis to over-geared consumers in the U.S. and UK, and as it is much into subprime," CLSA analyst Daniel Tabbush said in a note.

HSBC's tier 1 capital was 8.9 percent at the end of September -- which puts it above most European peers but below the Hong Kong bank average -- and other analysts said its high cash generation reduced the need for it to raise capital.

"Whilst this (capital raising) cannot be discounted entirely, we feel HSBC will not have a rights issue," said Alex Potter, analyst at Collins Stewart.

"HSBC is very cashflow generative. Attributable profits of $16 billion will be generated this year, we estimate, of which around $10 billion is the dividend payment," Potter said.

"HSBC sees high levels of scrip uptake of the dividend, however, meaning that the bank tends to have an effective annual share issue worth up to $5 billion in any case," he estimated.

(Reporting by Steve Slater and Dominic Lau; Editing by Hans Peters and Jon Loades-Carter)