Why is Swedbank doing a second rights issue?

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Today, Swedbank, a Swedish bank with huge Baltic loan loss exposure, surprised investors with a second rights issue in less than a year.  In going to investors for more money, the company said its doing so in a fully underwritten deal demonstrated “a position of strength.” “This is a forward-looking rights issue” to deal with “downside risk.”

Huh? I just reported on their dismal earnings two weeks ago (“Earnings results at Swedish banks show large writedowns in Baltics”). They had the worst results of the big four Swedish banks. It’s obvious to everyone that Swedbank needs the money; why else would they ask for it?  Didn’t they just promise not to ask for more capital in June?

The only strength I see is in timing i.e. they are getting money from investors while the getting is good and bank stocks are still a relatively hot commodity – shrewd manoeuvre but hardly a sign of strength.

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