The Motley Fool

Westpac shares on watch after raising $770 million

Westpac Banking Corp (ASX: WBC) shares are on watch this morning after the bank completed its $770 million capital raising.

What did Westpac announce yesterday?

Westpac successfully completed its share purchase plan (SPP) and raised $770 million.

The issue price is $24.20 per share, representing a 2.0% discount on Westpac’s 5-day volume weighted average price (VWAP) to 2 December.

Disappointingly, the SPP offer was made to 618,300 eligible shareholders with only 40,900 applications made. That represents a 7% participation rate, which could put Westpac shares under pressure this morning.

Westpac had initially planned to raise $500 million under the SPP with a further $2 billion from institutional shareholders.

The bank reported $68 million in withdrawals after announcing shareholders would have that option in the SPP. That came after the alleged Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act breaches and subsequent investigations into the bank.

Why does Westpac need fresh equity?

Westpac launched a $2.5 billion capital raising in November to provide a further buffer to APRA’s required benchmarks.

APRA requires systematically important banks such as Westpac to have a common equity tier 1 (CET1) ratio of 10.5% by 1 January 2020.

The Aussie bank reported a CET1 ratio of 10.67% at 30 September 2019 but is facing a potentially huge fine from APRA for the alleged AUSTRAC breaches.

Westpac is accused of 23 million breaches of the AML/CTF Act in relation to its international money transfer system.

The scandal has already claimed the scalps of CEO Brian Hartzer and Chairman Lindsay Maxsted. Both executives have announced their plans to resign following the explosive scandal.

How have Westpac shares performed this year?

Any hopes of a rebound in Westpac shares have been dashed by the recent AUSTRAC scandal.

The Westpac share price is down 1.10% this year, but isn’t the only ASX bank to be struggling.

Macquarie Group Ltd (ASX: MQG) is the only one beating the ASX 200 this year with its share price gains of 26.70%.

Bank of Queensland Ltd (ASX: BOQ) is down 23.24% since January, while Commonwealth Bank of Australia Ltd (ASX: CBA) is the best performing big four bank with its 11.64% gains this year.

If Westpac isn't on your radar at the moment, check out these 3 ASX dividend stocks instead!

Top 3 Dividend Shares To Buy For 2020

When Edward Vesely -- our resident dividend expert -- has a stock tip, it can pay to listen. With huge winners like Dicker Data (up 147%) and Collins Food (up 105%) under his belt, Edward is building an enviable following amongst investors that are planning for retirement.

In a brand new report, Edward has just revealed what he believes are the 3 best dividend stocks for income-hungry investors to buy now. All 3 stocks are paying growing fully franked dividends giving you the opportunity to combine capital appreciation with attractive dividend yields.

Best of all, Edward’s “Top 3 Dividend Shares To Buy For 2020” report is totally free to all Motley Fool readers.

Click here now to access this free report.

Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

FREE REPORT: Five Cheap and Good Stocks to Buy now…

Our Motley Fool experts have FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!