NEW YORK (
) -- Echoing a beating in the Asian markets overnight,
Royal Bank of Scotland
were down significantly at the market close of the shortened trading day on Friday, as a result of their exposure to the Dubai debt crisis. However, the banking sector woes on Friday extended further than the Dubai Effect, with
stock being destroyed as a result of a rights offering that was priced at a 53% discount.
Dubai -- which just a few years ago was a global financial industry darling scooping up marquee assets including a big piece of the Nasdaq Stock Market -- announced yesterday that it could not make its schedule of debt payments. HSBC,
, and the Royal Bank of Scotland (RBS) have the largest exposure to debt linked to the Gulf state, according to banking sector analysis issued on Friday.
RBS was the biggest lender (17%) to
, the state entity seeking to re-work its loan payback schedule. HSBC is on the hook for $611 million and Standard Chartered another $177, according to Goldman analyst Roy Ramos. HSBC has the largest exposure in the United Arab Emirates region at $17 billion, according to data from the
Emirates Banks Association
Shares in RBS and HSBC were both down to degrees reflective of their exposure to Dubai at the market close on Friday. HSBC shares were down close to 6% -- the shares had lost 7% in Asia yesterday as part of the broad Asian market sell-off after the Dubai announcement. Shares of RBS were down 4.7% at the close. Standard Chartered, with a much more limited exposure to Dubai, actually ended the day in London up 0.4%.
While HSBC and Standard had the largest exposures, the entire banking sector was hurting on Friday, with the financial sector down 2.3%.
Some banks were getting pummeled in the wake of capital market restructuring activity, too.
Lloyds Banking Group
which announced today a new convertible bond issuance as part of a restructuring package, was down close to 8%. ING was down near 20% after its $12 billion rights issuance -- part of its restructuring plan to separate banking from insurance -- was set at a 53% discount to stock price.
The financial sector drop was mirrored by many of the big U.S. banks.
Bank of America
were all down between 2% and 3% on Friday.
-- Reported by Eric Rosenbaum in New York
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