Britain's HSBC is set to announce a share sale of up to $18 billion, two sources familiar with the situation said on Saturday, in what could become the country's biggest-ever rights issue.

Europe's biggest bank would unveil the fund raising with its results on Monday, the sources said, following weeks in which investors have urged it to speak out about its plans and remove uncertainty weighing on the stock.

HSBC plans to launch a rights issue of as much as $18 billion, one of the sources said.

Goldman Sachs , JPM Cazenove and HSBC are the underwriters, and they are inviting co-bookrunners, joint lead managers and co-leads, the source said.

The three banks declined to comment.

The rights issue would be the biggest ever in Britain if it surpasses the 12 billion pounds raised by crisis-struck rival Royal Bank of Scotland last April.

Investors told Reuters this week they would support a rights issue, and wanted management to act quickly to remove uncertainty hanging over its share price [ID:nLN8206].

Markets will now be keen to see the discount in the share offering, after heavy drops in share prices marred a number of unsuccessful rights issues last year.

This is not a surprise to the market, the concern is how deep the discount will be, one of the sources said.

The discount should be around 35 percent and 40 percent, the other source said, adding that it would be risky for HSBC to offer a discount of less than 35 percent.

HSBC has traditionally been one of the best capitalized banks in the world and has not raised capital while others scrambled for cash as the credit crisis deepened.

But while it may be able to ride out the storm, a delay may make any cash call it needs at a later stage more painful and investors may prefer to stump up now.

In a separate report, the Financial Times said HSBC was also expected to announce a cut in its dividend.

HSBC is expected to report a 22 percent fall in annual profits to $19 billion, according to the consensus of analysts polled by Reuters Estimates.

It has avoided many of the big credit market hits taken by rivals, but rising bad debts around the world are pressuring its capital strength.

Its bad debts last year are expected to have jumped to $22-24 billion from $17 billion, largely due to North American impairments of around $16 billion, analysts have said, and bad debts are also rising in Europe and Asia.

Its Tier 1 capital was 8.9 percent at end-September, above the European average and near the top of its targeted range of 7.5 percent to 9 percent.

Shares in HSBC closed 6.8 percent lower on Friday, while European banking stocks <.SX7P> ended down 4.8 percent.

($1=.6964 Pound)

(Writing by Douwe Miedema, Additional reporting by Steve Slater and Jan Dahinten in Singapore; Editing by Ruth Pitchford)