British banks led the fall with Barclays BARC

The bank offered investors one new share for every twoexisting shares at S$5.42 a piece in December, which was then adiscount of about 45 percent. DBS shares were 57 percent abovethe rights issue price at the close of trading on Wednesday. Another Temasek-controlled bank PT Bank Danamon Tbk(BDMN.JK), Indonesia's fifth-largest lender, has hiredinvestment banks to help raise several hundred million dollarsin a rights offering, two people familiar with the matter saidon Wednesday ID:nHKG364156. Analysts have warned that DBS, which makes 90 percent of itsprofit from Singapore and Hong Kong, could be hit by loan lossesdue to the worsening economic outlook. Singapore's economy could shrink up to 5 percent in 2009,its worst ever performance, and face deflation, the governmenthas said.

"The primary investor concern about DBS at the moment isasset-quality deterioration," Trevor Kalcic, an analyst at RBSsaid in a recent note. "Clearly 2009 will herald a turn in the provisioning cycle.Bad debt charges peaked at 60 basis points following the 2001recession and we forecast a peak of 70 bps for 2009." DBS said last month its fourth-quarter earnings could show amoderate decline from the third quarter, when it reported a 38percent fall in quarterly net profit to S$379 million and saidit would cut 900 jobs, or 6 percent of its staff. This is the second time in less than a year the bank hasraised cash. It raised S$1.5 billion last May through a sale ofpreference shares paying investors 5.75 percent per annum (Reporting by Saeed Azhar, editing by Dan Lalor). Shares fell on deepening fears that top financialinstitutions would not survive the worsening economic crisis andjob losses mounted.

Belgium is planning a second round of financing for banksand France and Germany also offered more help, but the prospectthat more dramatic intervention will be needed as economies tipinto recession tugged the European banks index to a 16-year low. British banks led the fall, with Barclays (BARC.L) crashing20 percent to 58 pence and Lloyds Banking Group (LLOY.L) down 15percent at 38p on worries they and RBS could need more statehelp or be fully nationalised. The bank bailouts dealt a major blow to Britain's publicfinances as the recapitalisation of ailing Royal Bank ofScotland (RBS.L) blew out the deficit to its highest on recordin December. nLL421925 The data dealt a blow to sterling which hit a 7-1/2 year-lowagainst the dollar on the view the ailing UK financial sectorwould keep the economy weak despite bank bailouts, fiscalstimulus and interest rate cuts. The Office for National Statistics said the public sectorposted a net cash requirement of 44.2 billion pounds ($62billion) last month, its highest on record. Almost half was dueto the government's recapitalisation of RBS. "There are a lot of jitters in the financial markets, andit's taking its toll on currencies which have stressed capitalfinancing needs and which are particularly exposed to financialsector weakness," said Phyllis Papadavid, currency strategist atSociete Generale in London Britain launched a second bank rescue plan on Monday.

GERMANY In more evidence that economies are not respondinggovernment measures, Germany said its economy would contract by2.25 percent this year, sinking into its deepest recession sinceWorld War Two. nLL133492 Fourth-quarter GDP data on Friday are expected to confirmBritain is in recession for the first time since 1992. Redundancies gathered pace as banks pull credit lines,forcing companies to take harsh cost-saving measures. The number of Britons out of work is approaching twomillion, and the world's largest miner, BHP Billiton Ltd/Plc(BHP.AX), said it would cut 6 percent of its work force as itbattles a collapse in commodity prices. nSYD409818 BHP's announcement added to the dim outlook for metals andhelped push copper and aluminium prices down around 2 percent onWednesday.