HSBC launched a 12.5 billion pound ($17.75 billion) rights issue on Monday to shore up its balance sheet after annual profit fell and as bad debts soared in the United States.

The bank reported an adjusted pretax profit of $19.9 billion, down 18 percent versus 2007 but said that profit had slumped 62 percent to $9.3 billion from $24.2 billion a year earlier once it had included the impact of a goodwill impairment charge of $10.6 billion.

Pretax profit had been expected to drop to about $19 billion, according to the average forecast from Reuters Estimates.

The bank also cut its dividend for the full year by 29 percent to $0.64 per share and said it would close its troubled U.S. consumer loans business.

The company said that losses in the United States last year amounted to $15.5 billion, including the $10.6 billion goodwill impairment charge.

(Reporting by Steve Slater and Myles Neligan, writing by Paul Hoskins)