HSBC goes out lending and it’s without help of Whitehall
Dec 10 2008 By Nevill Boyd Maunsell
Have you noticed the big silence this week?
The echoing absence of shouts of “Me too” from rival banks since HSBC said it is doing precisely what the government has been asking – well, telling – them all to do. Get out there and lend.
First, our biggest bank announced it had earmarked £1billion to fund working capital in healthy British businesses turning over less than £25million a year. That was part of a £5billion package round the world.
Then it declared its intention to make a play for a bigger stake in UK mortgages by lending £15billion to home-buyers next year, twice what it did in the final bubble year, 2007.
Taxpayer-controlled Royal Bank of Scotland has made soothing sounds about not tightening the squeeze on small businesses.
Lloyds TSB, shortly to become the proud owner of stricken HBOS, complete with a bagful of bail-out money, says it is doing its best with mortgages. But that is it.
Nationalised Northern Rock is too busy getting rid of all the mortgages it can in order to pay back the Treasury.
The big difference is that HSBC has not taken a single billion from the taxpayer, nor, like Barclays, accepted even harsher terms from hard-nosed Middle Easterners to keep the government’s snout out of its affairs.
When the Bank of England said banks should shore up their balance sheets, HSBC transferred a slug of capital from the holding company and that was that.
It is not that it has escaped the credit crunch. On the contrary, it was the first bank anywhere to admit to trouble with American sub-prime mortgages.
HSBC just resisted the cult of the “efficient”, capital-lite, balance sheet in the easy years – as you might expect from an outfit that was to practical purposes the central bank of Hong Kong for the best part of a century.
Yesterday Michael Coogan at the Council of Mortgage Lenders bemoaned the plight of banks pulled this way and that by the government, the Bank and the FSA.
They are supposed to build up capital as a cushion against looming bad debts, pay 12 per cent on taxpayers’ money, cosset home-buyers who get behind with their mortgages, pass on Bank of England rate cuts to borrowers – but not to savers – and above all, lend, lend, lend.
HSBC doesn’t have to bother with that.
It can just press ahead and eat their breakfast.
