Tag Archives: HSBC

HSBC – 2011 – $22billion.

Steve Slater (Reuters) 5:19 a.m. EST, February 27, 2012

HSBC Holdings, Europe’s biggest bank, predicted growth in Asia and other emerging markets would outweigh sluggish European economies this year as it posted a $21.9 billion profit for 2011, the best outturn by a western bank so far.

HSBC added, however, that success in emerging markets was becoming increasingly expensive, with costs rising 10 percent, or $3.9 billion – a third of that due to higher pay.

Banks across Europe have been posting billions of dollars of losses as the euro zone sovereign debt crisis has eroded the value of their government bond holdings and hit their trading operations, and as they strive to meet tough new rules aimed at preventing a repeat of the 2007-09 banking crisis.

HSBC has been relatively unscathed because it makes more than three quarters of its profits outside Europe and north America. It remained upbeat on Monday about prospects for emerging markets despite fears that some are overheating and could see an abrupt slowdown in growth this year.

“We remain comfortable with the emerging markets (outlook) and are confident that GDP growth in emerging markets will be positive and China will have a soft landing,” Chief Executive Stuart Gulliver told reporters on a conference call.

“We think there’s some recent buoyancy in the U.S., so the real issue of negative focus is how the euro zone plays about,” he added, predicting the euro zone economy would flatline this year, with “marked recessions” in some southern countries.

HSBC, with around 7,200 offices in 80 countries, said pretax profit rose 15 percent to $21.9 billion in 2011, just below analysts’ average forecast of $22.2 billion in a Reuters poll.
The figure fell short of the group’s record profit of $24.2 billion in 2007, but beat all other western banks that have reported so far for last year, including U.S. rival J.P.Morgan which made a $19 billion profit.

The world’s most profitable banks in recent years have been China’s ICBC , which made $32 billion in 2010, and China Construction Bank , which made $26.4 billion.
HSBC’s profits were boosted by a $3.9 billion accounting gain on the value of its debt. Stripping that out, underlying pretax profit fell 6 percent to $17.7 billion, due in part to rising wages in emerging markets and to restructuring costs.

CUTS AND BONUSES

Gulliver, who is reshaping HSBC to cut annual costs by $3.5 billion, lift profitability and sharpen its focus on Asia, said he would step up his plan this year.

He said HSBC would continue to pay higher wages in emerging markets, where there is strong competition for bankers among international and local rivals, adding higher revenue from those areas showed the investment was worthwhile.

At 0945 GMT, HSBC shares in London were down 1.5 percent at 566.1 pence, lagging a 0.7 percent decline in the UK’s benchmark FTSE 100 index . The shares have beaten the STOXX Europe 600 banking index by 15 percent over the past year.

“They’ve had a good run so I can’t get too enthusiastic, but they’re (HSBC) going in the right direction and it’s a good bet in a difficult sector,” said Brown Shipley fund manager John Smith, who holds HSBC shares in his portfolio.

HSBC said profits at its investment bank fell 24 percent to $7 billion, hurt as the euro zone debt crisis slowed capital markets activity in the second half of last year.
Loan impairment charges and other credit risk-related provisions, however, fell $1.9 billion to $12.1 billion.

The group said it paid out $4.2 billion in bonuses, down 2 percent on 2010. Banks are coming under intense pressure from politicians and the public to rein in pay awards because of the role of the sector in the world’s economic problems.

HSBC said it paid one of its bankers, whom it declined to name, 8 million pounds ($12.7 million) last year. Gulliver was the second-highest paid employee, getting 7.2 million pounds — including a 2.2 million bonus — down from 8.4 million in 2010 when he ran the investment bank.

($1 = 0.6306 British pounds)

(Additional reporting by Sarah White and Sudip Kar-Gupta; Writing by Mark Potter; Editing by David Holmes)
Copyright © 2012, Reuters

No, No, No!

Yvette “tell it how it is” Cooper.

21st Century heroine.

The Treasury statement on financial support for our banking system has been made! Perhaps this hails the beginning of a new era when the Chancellor can stop flip-flopping from meeting to meeting and knocking-up air miles.

By now he should  have collected enough points to buy a couple of banks.

The Treasury statement  (all 899 words of it) is very light on numbers and has no mention of any changes in governance of any of the banks (and building society) involved.

These are the lending institutions which “have confirmed their participation in a Government-supported recapitalisation scheme.”

Abbey , Barclays,  HBOS,  HSBC Bank plc,  Lloyds TSB,  Nationwide Building Society,  Royal Bank of Scotland, Standard Chartered

Another quote from the statement: 

“In reaching agreement on capital investment the Government will need to take into account dividend policies and executive compensation practices and will require a full commitment to support lending to small businesses and home buyers.”

It appears that the taxpayer is paying the banks to lend. To the taxpayer.

A Socialist is an individual who has nothing and wants to share it with everyone.”

Perhaps that should be the new definition of a banker. 

Last year, the banks declared (mostly illusory) combined profits of nearly £40 billion. There were self-congratulory  dinners, awards, chairmen were frolicking round TV studios and radio stations, chief executives were granting interviews to the media and there was lots of corporate merriment. Sunny days.

These are the same people who, during the last few months have avoided the dark clouds of banking meltdown  by  remaining  hidden in their gold-plated bunkers. They have kept their well-coiffed heads down and  allowed their poorer politician cousins to take-on the stock market bullies.

How many reassuring statements have we heard from CEOs and Chairmen – apart from the very few self-pitying statements after a takeover  or nationalisation? Where have all the numbers gone?

It would be very interesting to see some numbers.

What is the “debt” of each of the above institutions and what does it consist of?

It should no longer be acceptable to keep blaming the American sub-prime market, because the global figures that are currently being bandied about are well-in-excess of the $1.2 trillion apparently written in sub-prime mortgages.

These mortgages are now being discussed as if they are worthless. They are not worthless because at the end of the line, there is a property which has a value. We should see a calculation whereby each bank displays two numbers:

1. How much it spent on bad investments?

2. What is the current estimated value of those investments?

We could also ask why it is that banks stop talking in numbers when they make a loss  and of course, it goes without saying that the govenment will be carrying out a full audit of the banks – or are we still taking their word as gentlemen?

And what is the smug bloke from Lloyds TSB doing on the list? Eric Daniels is his name, he is their Chief Executive  and the claim was that his bank was OK because of their ultra-conservative investment policy. More hot air? CLICK HERE.

Finally, this is a  time when we do need words – not from the bankers but from the politicians. Warm inspirational words, sentences dripping  hope – a  sunny painting of the world in twelve months time , lots of “doing” words and 100% honesty.

Yvette Copper has provided the most memorably honest quote: ” The bankers screwed -up”.

An understatement, but nevertheles memorable.

p.s. Why are we including the Santander Group and the Hong Kong and Shanghai Banking Corporation in this scheme?

 

This is the Treasury statement in full:

After consultation with the Bank of England and the Financial Services Authority, the Government announces that it is bringing forward specific and comprehensive measures to ensure the stability of the financial system and to protect ordinary savers, depositors, businesses and borrowers.

In summary the proposals announced today are intended to:

Provide sufficient liquidity in the short term;

Make available new capital to UK banks and building societies to strengthen their resources permitting them to restructure their finances, while maintaining their support for the real economy; and

Ensure that the banking system has the funds necessary to maintain lending in the medium term.

In these extraordinary market conditions, the Bank of England will take all actions necessary to ensure that the banking system has access to sufficient liquidity. In its provision of short term liquidity the Bank will extend and widen its facilities in whatever way is necessary to ensure the stability of the system. At least £200bn will be made available to banks under the Special Liquidity Scheme. Until markets stabilise, the Bank will continue to conduct auctions to lend sterling for three months, and also US dollars for one week, against extended collateral. It will review the size and frequency of those operations as necessary. Bank debt that is guaranteed under the Government’s guarantee scheme will be eligible in all of the Bank’s extended-collateral operations. The Bank next week will bring forward its plans for a permanent regime underpinning banking system liquidity, including a Discount Window facility.

In addition the Government is establishing a facility, which will make available Tier 1 capital in appropriate form (expected to be preference shares or PIBS) to ‘eligible institutions’. Eligible institutions are UK incorporated banks (including UK subsidiaries of foreign institutions) which have a substantial business in the UK and building societies. However applications are invited for inclusion as an eligible institution from any other UK incorporated bank (including UK subsidiaries of foreign institutions). In reviewing these applications the Government will give due regard to an institution’s role in the UK banking system and the overall economy.

Following discussions convened by HM Treasury, the following major UK banks and the largest building society have confirmed their participation in a Government-supported recapitalisation scheme. These institutions comprise:

Abbey

Barclays

HBOS

HSBC Bank plc

Lloyds TSB

Nationwide Building Society

Royal Bank of Scotland

Standard Chartered

These institutions have committed to the Government that they will increase their total Tier 1 capital by £25bn. This is an aggregate increase and individual increases will vary from institution to institution. In order to facilitate this process the Government is making available £25bn to be drawn on by these institutions if desired to assist in this process as preference share capital or PIBS and is also willing to assist in the raising of ordinary equity if requested to do so. The above institutions have committed to the Government that this will be concluded by the end of the year.

In addition to this, the Government stands ready to provide an incremental minimum of £25bn of further support for all eligible institutions, in the form of preference shares, PIBS or, at the request of an eligible institution, as assistance to an ordinary equity fund-raising.

The amount to be issued per institution will be finalised following detailed discussions. If the Government is to provide the capital, the issue will carry terms and conditions that appropriately reflect the financial commitment being made by the taxpayer. In reaching agreement on capital investment the Government will need to take into account dividend policies and executive compensation practices and will require a full commitment to support lending to small businesses and home buyers.

The Government will take decisive action to reopen the market for medium term funding for eligible institutions that raise appropriate amounts of Tier 1 capital.

Specifically the Government will make available to eligible institutions for an interim period as agreed and on appropriate commercial terms, a Government guarantee of new short and medium term debt issuance to assist in refinancing maturing, wholesale funding obligations as they fall due. Subject to further discussion with eligible institutions, the proposal envisages the issue of senior unsecured debt instruments of varying terms of up to 36 months, in any of sterling, US dollars or Euros. The current expectation is that the guarantee would be issued out of a specifically designated Government-backed English incorporated company. The Government expects the take-up of the guarantee to be of the order of £250bn, and will keep this under review alongside ongoing monitoring of capital positions and lending volumes.

To qualify for this support the relevant institution must raise Tier 1 capital by the amount and in the form the Government considers appropriate whether by Government subscription or from other sources. It is being made available immediately to the eight institutions named above in recognition of their commitment to strengthen their aggregate capital position.

The Government has informed the European Commission of these proposals and is actively talking to other countries about extending these proposals and has committed to work together with them to strengthen the international system.

The Government is moving ahead immediately with the internationally agreed proposal for colleges of supervision and other measures to improve supervision of the system. After discussions with the major economies at the G7 meeting on Friday, the Government and other countries agreed on the need for a meeting at heads of Government level.

Gordon the gamblers’ friend

Good bloke that Gordon Brown. He has agreed (on our behalf) that we taxpayers will subsidise the  the sub-prime gambling losses of our banks.

Imagine what would happen if you went to Ladbroke’s, put a few quid on an outsider and lost a lot of money. Do you think that if you then  went to Gordon for a temporary sub , he would bung you a few pounds to tide you over? No, me neither.

Those of us who have our houses repossessed in the next few months should remember that the lending institutions who are taking our homes are being subsidised with our own money. The taxes that we pay on our income, our food , our savings and everything else, are being used to prop up bad investments made by institutions who (wait for it!)  – give us investment advice. If it wasn’t so tragic it would be ironic.

Whenever I see the banking spivs in handmade suits meeting with politicians, I always feel that someone is being conned – and it isn’t the spivs.

The banks should make their figures available for public scrutiny.

I do not mean the sort of unintelligible financial garbage and graphs that are the norm. Let us have four columns – 1. The Bank 2. Current losses 3. Potential Future Losses 4. How much cash they have.

There is no doubt that they haven’t all made the sorts of losses that we are being frightened with.

Most banks make obscene profits which should somehow be capped or they should  use the profits from their non-mortgage sectors to subsidise their losses. Any Retail Bank also has an Institutional Bank, an Investment Bank, a Card Business and many other revenue streams which they conveniently forget about at times like these.

Incidentally, most of their losses are potential losses.

Why should the British taxpayer subsidise foreign banks such as Abbey (owned by the Spanish Santander Group), Citigroup (American) or HSBC (Hong Kong and Shanghai Banking Corporation)?

There has been a stitch-up and the banking fat cats are lapping it up.