Australia’s Macquarie Considers Raising Capital

SYDNEY (Reuters) – Macquarie Group (MQG.AX), Australia’s top investment bank, said on Thursday it was considering raising capital, a day before the group is expected to announce its first full-year profit fall in 17 years.

Only two months ago, Macquarie said it had no current plans to raise funds because it had A$2.9 billion ($2.14 billion) in excess capital.

The news prompted speculation whether Friday’s result would be worse than expected or whether the group was just taking advantage of a rising share price.

Macquarie’s stock has more than doubled since early March, partly on the bank’s reassurances it had excess capital and no immediate plans to raise funds. The stock last traded at A$33.48, though it fell 62 percent over calendar 2008.

Analysts have been speculating that Macquarie could take advantage of its stock’s recovery to raise up to A$800 million, though some investors were still surprised by Thursday’s news.

“I think the market’s going to be very disappointed if they are (raising money), given that they’ve been on the front foot saying they don’t need to raise capital,” said Mark Nathan, a portfolio manager at Fortis Investment Partners.

Peter Vann, head of investment research at Constellation Capital Management, was also taken aback.

“It’s surprising that they are contemplating raising capital when they just recently seemed to be so comfortable with the existing capital,” he said.

Macquarie shares were suspended, pending a further announcement.

The group warned in February that its full-year profit would halve to about A$900 million and that it would take about A$2.0 billion worth of asset writedowns in the second half, after extremely challenging market conditions.

(Reporting by Mette Fraende; Editing by Mark Bendeich)