Singapore: Singapore's DBS Group Holdings Monday announced a rights issue to raise net proceeds of approximately 4 billion Singapore dollars (2.76 billion US dollars) on the basis of one new ordinary share for every two existing shares held at the close of business on December 31, 2008.

The capital-raising exercise would further strengthen DBS' balance sheet at a time when investor preference globally has shifted in favour of banks with higher capital levels, especially core capital levels, DBS said in a statement.

DBS said the rights issue would strengthen its capital position and provide the bank with a competitive advantage to strengthen existing customer relationships, seek out new customers, and selectively grow its loan book to increase market share and profitability.

"DBS is initiating this capital raising exercise from a position of strength," said DBS chief executive officer Richard Stanley, assuring that the bank's business continued to perform well despite the challenges of the global economic downturn.

He also stressed that the bank's balance sheet was characterised by strong liquidity, capital adequacy ratios and asset quality.

DBS said the rights issue would enable it to capture opportunities to entrench its market position in key Asian markets and confidently weather the economic uncertainties ahead.

DBS said organic growth remained its priority and the capital raising was not intended for any merger and acquisition activity or extraordinary provisions. (dpa)