HSBC is to own up to the full horror of its American sub-prime business, Household, when it unveils a £7bn goodwill write-off in addition to a £17bn provision against rising bad loans.

The provisions have been anounced alongside a heavily discounted £12bn rights issue — the biggest ever held in Britain — and a dividend cut, as Stephen Green, the bank’s chairman, moves to shore up its balance sheet.

The fundraising will make HSBC the strongest bank in the world that has not received a cash injection from the state.

Its tier-one ratio, a key measure of financial strength, will rise from 8.5% to 10.5%. Analysts say it will provide a $40 billion (£28 billion) buffer against further bad debts.

Sunday Times, Sunday Telegraph, Daily Telegraph, BBC