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Rules may see HSBC leave UK
Source: Agencies |
November 10, 2011, Thursday
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Print Edition
Print Edition
HSBC said costly new capital rules might force it to leave the UK, as it reported a bigger-than-expected fall in third-quarter profit, hit by lower investment banking income and higher bad debt in the United States.
Europe's biggest bank yesterday said its underlying pretax profit was 36 percent lower at US$3 billion in the three months to the end of September.
"Trading conditions showed some improvement during October, but they remain very difficult and continuing turbulence in global markets may result in further downside risk," the bank said in a regular earnings statement.
HSBC Chief Executive Stuart Gulliver aims to cut annual costs by US$3.5 billion and sharpen the bank's focus on Asia, quitting countries where the bank lacks scale in an attempt to revive profitability.
"Underlying Q3 performance was shy of market expectations,'' CSC Research analysts said in a note.
"Subdued trading outlook due to continuing turbulence in global markets and expectations of 'soft landing in China' do not bode well for the equity story," they said.
The bank also had a shot at the City of London, saying the cost of UK regulatory reform could be as high as US$2.5 billion, and that it might move its headquarters out of the country where it has been based for the last 20 years or so.
HSBC said loan impairment charges and other credit risk provisions were US$700 million higher at the end of the quarter compared to a year ago, which was mainly due to an increase in its run-off portfolio in North America.
The rise was largely linked to the moratorium on foreclosures in the US, HSBC said.
It had cut headcount by 5,000 since the first quarter.
Europe's biggest bank yesterday said its underlying pretax profit was 36 percent lower at US$3 billion in the three months to the end of September.
"Trading conditions showed some improvement during October, but they remain very difficult and continuing turbulence in global markets may result in further downside risk," the bank said in a regular earnings statement.
HSBC Chief Executive Stuart Gulliver aims to cut annual costs by US$3.5 billion and sharpen the bank's focus on Asia, quitting countries where the bank lacks scale in an attempt to revive profitability.
"Underlying Q3 performance was shy of market expectations,'' CSC Research analysts said in a note.
"Subdued trading outlook due to continuing turbulence in global markets and expectations of 'soft landing in China' do not bode well for the equity story," they said.
The bank also had a shot at the City of London, saying the cost of UK regulatory reform could be as high as US$2.5 billion, and that it might move its headquarters out of the country where it has been based for the last 20 years or so.
HSBC said loan impairment charges and other credit risk provisions were US$700 million higher at the end of the quarter compared to a year ago, which was mainly due to an increase in its run-off portfolio in North America.
The rise was largely linked to the moratorium on foreclosures in the US, HSBC said.
It had cut headcount by 5,000 since the first quarter.
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