HSBC Holdings shares fell 3.96 per cent yesterday after a 'routine' letter to shareholders revived speculation that the bank was poised to make a major acquisition.
However, analysts in London said they did not believe a big deal was in the offing.
In the letter, sent in March, HSBC asked for permission to raise its authorised share capital at its annual meeting this month.
HSBC wants to issue up to 1.9 billion new shares, about 20 per cent of its existing share capital, raising the number of shares in issue to 11.4 billion.
Although it is routine for companies to seek such mandates, it is the amount of new shares HSBC intends to issue, worth GBP17 billion (about HK$189.91 billion), that has set tongues wagging about a possible acquisition.
'It is a clear sign to the market that it is intending to use the share issue as a leeway to an acquisition, it is clearly on the prowl,' said John Kurk, an analyst at Fox Pitt Kelton.