Current shareholders to be given further investment opportunity with rights issue

Banking giants HBOS are expected to conduct a rights issue to existing shareholders in order to help raise the extra billions they need to help them through the current credit crunch within the economy.

Rights issues are relatively rare and are usually used for more positive business purposes such as fund raising exercises for hefty take overs and acquisitions.

HBOS is Britain's largest lender and hopes to raise at least £4 billion in this rights issue just a week after fellow banking giants The Royal Bank of Scotland put forward a right issue to its shareholders to raise a staggering £12 billion.

Rights issues are a convenient method for listed companies to raise extra funds by making extra shares available. Current share holders are effectively asked to put hands in their pockets to buy these extra shares however there is no obligation for them to do so.

This particular rights issue might prove a little more difficult to address given the amount of small investors involved in the companies makeup.

HBOS was founded in the 1990's between the Halifax and Bank of Scotland. They have over two million share holders with many holding just a few hundred shares which could potentially make this exercise and administrative nightmare.

HBOS want this as the preferred option otherwise they might have to consider the sales of assets which reports state they are trying to avoid.