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A tale of two banks: HSBC and Santander

On Thursday 23rd October, I received an email
newsletter from VRL Publishing with the headline titled: "HSBC stands
out from the crowd”. Here’s the opening paragraph:

 

“HSBC’s near-unparalleled strength in the face of the
tornadoes blowing through global financial markets has been re-emphasised with
a swift, internally funded £750 million ($1.3 billion) recapitalisation of its
UK business. The move came at a time when most of its rivals in the UK – and
the world – have been forced to turn to governments to underwrite rights issues
and inject capital.”

 

On Friday 24th October, HSBC’s shares fell £1:09p
to £6:96p because, according to the Times, “Michael Helsby of Morgan Stanley gave
warning that the book value of HSBC’s North American loans – mainly sub-prime
mortgages offered through its Household division – is $33 billion more than
their present market value. If the bank writes off that sum, its capital
reserves would fall to the level at which its rival UK banks are having to be
recapitalised by taxpayers.”

 

Mind you, the Times goes on to report about Abbey/Santander:

 

“Abbey will reveal this week that it has swept up billions
of pounds in customer savings from rivals after the uncertainty generated by
the £37 billion bank bailout scheme … the figures come amid mounting
speculation that Abbey’s Spanish parent group, Santander, is under pressure to
raise more capital. The rumours have intensified after a string of bad news
from South America, where Santander has huge exposures.”

 

Can anyone make sense of it all anymore?

 

These reports follow on the back of something else that
doesn’t make much sense, which is that the bailout the banks have been given
has not resulted in any further lending to anyone.  The Times reports that the Government is now pulling the
bankers in again to tell them why, whilst the New
York Times
reports that the banks are keeping all the money to
themselves because "all of the combined profits that major banks earned in
recent years have vanished".

 

Oh yea, and the New York Times also has a brilliant
multimedia montage about the crisis. 

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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