Right in the thick of the global financial crisis Allens Arthur Robinson, Freehills and Sullivan & Cromwell have successfully pulled off a A$2.5bn capital raising for Westpac. Could this be an early sign that other banks may follow suit?

Allens' Stuart McCulloch, Freehills' Philippa Stone and Sullivan & Cromwell's team successfully placed the A$2.5bn with institutions through an institutional book build, with a further A$500m to retail investors through a non-underwritten share purchase plan.

The bank undertook the raising taking into consideration a number of factors including the slowing economy and further expected deterioration in the credit market.

Freehills partner Philippa Stone said a number of issuers, including banks, are strengthening their balance sheets through capital raisings. "Westpac has done it. And Commonwealth Bank [CBA] recently announced a A$750m raising to redeem its PERLS II securities and of course there are other non-bank issuers currently in the market for capital," she said.

At the moment it is unlikely that banks would consider a hybrid capital raising, since Westpac has indicated its reluctance to replace St.George's hybrids. The bank felt that hybrid equity markets were becoming increasingly challenging and was uncertain of their success in the present economic conditions.

However, Stone is still positive about hybrid work: "Banks are very scientific though in managing their capital and I am sure they will continue to look at the hybrid market."