ANZ launches $3 billion capital raising

While the banks were all softer after ANZ’s move, many analysts have questioned whether the capital raising will be sufficient, and have said it may need to be expanded.

Asked about future capital plans, ANZ reiterated on Thursday that it has many options.

But aluminium hit a six-year low, closing down 1.1 per cent, its weakest point since July 2009.

Sharp weakness in local banking stocks, sparked by ANZ’s $3 billion capital raising to meet new regulatory rules, has dragged the Australian sharemarket lower at noon.

The placement has been fully underwritten by Citigroup Global Markets Australia Pty Limited, Deutsche Bank AG, Sydney Branch and J.P. Morgan Australia Limited.

ANZ placed its shares in a trading halt ahead of the announcement on Thursday, when it also revealed its latest unaudited quarterly cash profit results. CBA shares closed $2.82, or 3.2 per cent, lower at $84.55 while Westpac lost $1.05, or 3.04 per cent, to $33.44 and NAB dropped 75 cents, or 2.2 per cent, to $33.59.

Mr Joshi said bank stocks were likely to lose value throughout the following month or so but would recover once their capital management plans were completed.

Elsewhere, mining stocks were buoyant, thanks to a strong bounce in the iron ore price overnight, which tracked against other commodities on the markets. ANZ also said its provisions for bad and doubtful debts had increased, partly due to stress in the resources and agriculture sectors.

BHP Billiton lifted 0.57 per cent to $26.64, while Rio Tinto gained 0.89 per cent to $53.45.

ANZ also reported cash profit rose 4.3 percent to A$5.4 billion for the nine months ended June 30.

The biggest gains of the day were enjoyed by OzForex, up 12.4 per cent to close at $2.54 after the release of an ambitious new strategy, and retailer Kathmandu Holdings, after the company’s board announced it would reject a takeover offer and provided an upbeat trading update. Australia) by comparison trades at 15.3 times, Insurance Australia Group (IAG.