CBA's raising hit

As Australian banks lift their Tier 1 capital to around 8 per cent and look to shareholders to provide higher levels of capital, Australia's second-largest bank has managed to raise more than $850 million in a share placement offer.

Commonwealth Bank of Australia has raised $865 million through a share placement plan, boosting its Tier 1 capital ratio by 30 basis points, which was sitting at 8.75 per cent at the end of last year.

CBA says it is pleased with the result, which is not surprising given it is one of the better share placement results for an Australian bank.

In October, National Australia Bank raised $250 million through a share placement plan priced at $19.97. Westpac Banking Group's share placement plan, which closed at the end of January and was priced at $15.26, raised $442 million. In an announcement last month, ANZ Banking Group said its pro-forma 2008 Tier 1 capital ratio stood at 8.35 per cent, substantially above regulatory requirements, and there were no current plans for a capital raising.

Under the CBA offer, investors could apply for up to $10,000 worth of ordinary shares, priced at the lower end of $26 and the average price in the group's shares over the last five trading days of the offer period. The offer closed on 11 March.

CBA says 110,000 of its 800,000 shareholders took up the offer, indicating shareholders took up an average of $7,200 worth of shares.

Stewart Oldfield, banking analyst with EL&C Baillieu Stockbroking, says the result is not all that surprising given the CBA has one of the largest share registries in the country, which includes a large number of loyal retail shareholders.