Today's news headlines are dominated by HSBC's results, which show profits down 62% and a rights issue of $17 billion (£12.5 billion) at a discount on the share price of almost half (shares closed at £4.91 on Friday and the rights issue is 5 shares for every 12 at £2.54).
The result is the HSBC's shares slipped 25% in today's trading and pulled down the FTSE and the Banking sector overall.
Rather than reading about it, here are the key numbers:
Profit down 62 percent to £6.5 billion ($9.3bn) of which there's a £7 billion ($10 billion) write-down on goodwill at Household, the USA mortgage division, which is closing down all operations. HSBC will keep a cards presence in the USA, but has lost over $30 billion on Household in the last three years. That's double the $15 billion they paid to acquire them back in 2003.
The rights issue is to steer through the storm, but is unclear as to why it's needed. Speculation is therefore that there are more losses at Household to come, or Asia might implode (oh no, please no!) or that they want to acquire someone (yea, right).
Tier 1 Capital is increased from 8.5% to 9.8%, and HSBC has a sound ratio 83.6% for loans to deposits.
Things worth reading other than this, and the best coverage of HSBC's results, include:
- HSBC asks for £12.6bn in record rights issue (The Independent)
- HSBC's record £12.5bn cash call sends its shares tumbling (The Guardian)
- HSBC unveils record £12.5bn rights issue (Financial Times)
- HSBC: in numbers and quotes (The Telegraph)
- How sub-prime sunk the world (The Guardian)
- Cash Machines fraud sees increase (BBC)
- Deutsche Bank loses key figures (Financial Times)
- Freddie Mac chief resigns after five months (The Times)
- AIG in rescue deal amid big losses (The Independent)
- China built enormous stake in US equities just before crash (The Telegraph)
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.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...
