Details of the £4 billion cash call for shareholders have been made public.
The UK's biggest mortgage lender is to launch a rights issue for shareholders later this month.
HBOS released a timetable for the cash call today, which would offer investors two new shares for every five held at a price of 275p per share. Some have expressed concerns about the value of their current stock being diluted by the £4 billion move, although the fact that the new shares are being offered at a 45 per cent discount from the market price has alleviated these worries to an extent.
However, the bank has faced credit crunch-related asset write-downs totalling almost £3 billion so far this year. As a result, the need to raise fresh revenue in order to restore the balance sheet has become pressing.
Also contained in the 20-page HBOS prospectus, which is to be circulated among the two million private shareholders who collectively own around 27 per cent of the bank's total stock, is details of a free dealing service which would let the investors sell their entitlement to the new shares if they wish.
"A trading update will be incorporated in the prospectus, which is scheduled for publication later this month," the bank said in a statement, which also contained reassurances aimed at investors concerned about the bank's current financial position.
"Current trading remains satisfactory," HBOS added.
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