Tuesday, 16 December 2008 04:00

LTTP (Late to the Party), pt 4

From Bloomberg :

HSBC Holdings Plc, Europe’s biggest bank, may seek to raise about $14 billion as increasing bad-loan provisions erode profit, CLSA Asia-Pacific Markets said.

The bank may raise funds through a share placement or a rights offering, CLSA analysts led by Bangkok-based Daniel Tabbush said in a note to clients today. CLSA cut its share price target for HSBC by 30 percent to HK$64, citing the risk that rising loan defaults in the U.K. and U.S. will hurt earnings.

HSBC, which earns more than three-quarters of its profit in emerging markets, has avoided the funding strain that forced Royal Bank of Scotland Group Plc and HBOS Plc into government bailouts. Tabbush said the bank will have to make more provisions in 2009 because 75 percent of its loans are in the U.S. and U.K., where customers are buckling under excessive debt.

“Every bank that’s raised cash has said its capital position is fine,” Tabbush said in an interview. “The regulators will probably require higher levels of capital and lower levels of leverage and HSBC will face the same issue.”

CLSA also cited HSBC’s failure to sell its headquarters in London for an expected $2 billion gain, together with the bank’s announcement yesterday that it lent $1 billion to clients who invested funds with the brokerage of Bernard Madoff, accused by regulators of using his investment advisory firm to run a $50 billion Ponzi scheme.

The bank also has clients in its “global custody business,” who have invested with Madoff, HSBC said in a statement yesterday.

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Imagine if you could have shorted HSBC early in the summer when it was trading in the mid '70' and 80's. Just imagine... If you read the blog.

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(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
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HSBC_Holdings_Report_04August2008 - pro

HSBC_Holdings_Report_04August2008 - retail <!-- -->

Last modified on Tuesday, 16 December 2008 04:00