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Things worth reading: 2nd March 2009

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:

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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