|Bid||450.00 x 0|
|Ask||510.00 x 0|
|Day's range||465.75 - 480.90|
|52-week range||5.76 - 741.00|
|Beta (5Y monthly)||0.64|
|PE ratio (TTM)||15.76|
|Earnings date||28 Apr 2020|
|Forward dividend & yield||0.40 (8.03%)|
|Ex-dividend date||27 Feb 2020|
|1y target est||9.20|
HSBC has said it is delaying the "vast majority" of its planned redundancies to deal with the fallout from the coronavirus pandemic, a memo sent to staff seen by Reuters said. "Because of the extraordinary impact of the COVID-19 pandemic, we have decided to pause, for the time being, the vast majority of redundancies associated with this programme where notices have not already been issued," HSBC CEO Noel Quinn said.
HSBC and Lloyds Bank are asking entrepreneurs to put their savings on the line to access government-backed loans of over £250,000.
(Bloomberg Opinion) -- Banks in Asia are suddenly shy to part with dollars. And who can blame them? Many of their corporate clients are borrowing the U.S. currency and depositing it with the same banks — just in case they can’t get the funding when they need it. The caution amid the coronavirus outbreak isn’t all that different from Amazon.com Inc. trying to discourage vendors from cornering toilet paper supplies. “Corporate banks are becoming a bit more discretionary about permitting draws on credit lines where hoarding cash is the sole objective,” according to Greenwich Associates consultant Gaurav Arora. The dollar squeeze is evident, as one of us wrote Monday, in the hefty premiums South Korean banks must fork out to borrow the U.S. currency — a reliable indicator of trouble in the past. It also appears that China’s banks may be less eager or able than before to fund the dollar needs of their corporate borrowers, Bloomberg Opinion’s Anjani Trivedi noted Wednesday.For Asia, the crunch is an unwanted gift from European lenders, whose departure from the region post-2008, as well as regulations that reined in Wall Street firms, have led to a funding hole. Japan’s banks have expanded and lenders like BNP Paribas SA have scaled up trade finance, but they’re yet to fill the void, especially as troubled Deutsche Bank AG shrinks. The German lender was in the top five corporate banks in Asia in 2014; last year, it wasn’t even in the top 10, according to Greenwich. Some countries like Korea have felt the loss more keenly than others. U.K. banks’ exposure to Korea has dwindled to $77 billion from $104 billion in the first quarter of 2008. German lenders’ claims have fallen to $13 billion from $36 billion.Japan’s lenders have taken up part of the slack. Driven by negative interest rates and aging demographics at home, they have dished out funds aggressively in Southeast Asia as well as to global deal-chasing clients like SoftBank Group Corp. The large U.S. operations of megabanks like Mitsubishi UFJ Financial Group Inc. also provide them with liquidity, as does their stack of fully convertible, cheap yen deposits. But some Japanese lenders have piled into off-balance sheet products, which suck liquidity in times of stress. Japan's Norinchukin Bank, a lender to farmers and fisherman, was one of the world’s largest buyers last year of collateralized loan obligations, bundled U.S. leveraged loans.When the Fed extended emergency swap lines to South Korea, Australia, Singapore and New Zealand last week to ease the worldwide dollar shortage, a step that our colleague Shuli Ren called for here, it was a sign that the liquidity problem was serious enough. Overall, the Fed gave temporary access to nine authorities in addition to the five that it has permanent arrangements with for making dollars available.(2) Emerging economies like India, Indonesia, Chile and Peru, though, have seen their requests for swap lines rebuffed in the past. The U.S. only helps those it sees as important to the stability of its own banking system.So what can Asia do? Start with the most extreme case. Australia needs U.S. dollar funding not just for foreign-currency loans but also for Australian dollar mortgages. That’s because the domestic deposit base is small, compared with the size of the banking industry. The average loan-to-deposit ratio of Macquarie Bank Ltd. and other major Australian lenders was 126% versus 68% for the top Asian banks, namely DBS Group Holdings Ltd., Mizuho Financial Group Inc., MUFG, Standard Chartered Plc, and HSBC Holdings Plc, according to banking analyst Daniel Tabbush, founder of Tabbush Report.Offshore funding sustains around one-third of major Australian banks' total worldwide operations. While the International Monetary Fund and others have flagged the reliance on foreigners as problematic, the Australian regulators have so far refrained from discouraging lenders to borrow abroad. Yet, the fact that the country had to seek dollars from the Fed during the epidemic upheaval and auction them to its banks will call into question the sagacity of this relaxed approach. In rest of Asia, one lesson from the dollar squeeze is to shun protectionism. Well-capitalized regional banks like Singapore’s DBS could supplement the three traditionally entrenched foreign lenders: HSBC, StanChart, and Citigroup Inc., a big cash management bank for Western multinationals. DBS could emerge as an Asian global bank, though in good times its expansion has been stymied by regulators playing to nationalist political sentiment, as we saw when it wasn’t allowed to buy Indonesia’s PT Bank Danamon in 2013.The next step may be to seek more intermediaries with scale. JPMorgan Chase & Co. is pumping top dollar into serving corporate treasuries as a safeguard against the fickle fortunes of investment banking. Japan’s lenders could also do more: MUFG is already one of the region’s most aggressive lenders and has the historical advantage of having a dollar clearing license, like HSBC. Unlike 2008, this isn’t a credit contagion yet, though that could change if large, messy financial bankruptcies were to erupt. But beyond the current crisis, the regulators must plan for the next squeeze. Since not everyone can rely on the Fed, the dollar supply chain is each country’s responsibility. At least until a credible alternative to the U.S. currency comes along. (1) The standing facilities are with the Bank of Japan, the Bank of England, the Bank of Canada, the Swiss National Bank and the European Central Bank.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
These two FTSE 100 (INDEXFTSE:UKX) stocks could offer good value for money in my opinion.The post The stock market has crashed! Why I'd buy these 2 FTSE 100 shares in an ISA today appeared first on The Motley Fool UK.
British banks must keep lending to businesses through the coronavirus crisis to ensure that previously viable companies do not fail, the government and Bank of England said on Wednesday. In a joint letter to the chief executives of major banks, finance minister Rishi Sunak, Bank of England Governor Andrew Bailey and the interim chief executive of the Financial Conduct Authority, Chris Woolard, urged lenders to support the economy.
HSBC (LON:HSBA) is a large cap in the Banking Services industry. It operates across various geographical regions, which include Europe, Asia, Middle East and N8230;
(Bloomberg Opinion) -- Pummeled by the coronavirus, China Inc. now faces another disruption: a global shortage of dollars. Chinese companies are looking at $120 billion of debt repayments this year on their U.S. dollar denominated debt. Real estate developers and industrial companies make up three-quarters of the outstanding $233 billion of junk-rated bonds. There’s another $563 billion of higher-rated debt. The question isn’t just whether they’ll be able to pay their debt. It’s worth wondering how they can access the needed dollars — and at what cost.Globally convulsing markets have put a strain on U.S. dollar funding. In China, signs of tightness in dollar liquidity are emerging, based on 3-month interbank overnight rates and other indicators. Banks are trying to beef up dollar cash positions. Meanwhile, yields on big chunks of Chinese debt have shot to over 15% as investors unload, increasing the cost of borrowing and refinancing. Hedge funds and other asset managers that bought up junk-rated Chinese dollar debt are unwinding those positions. In times like these, investors aren’t discriminating. The pain will persist: Credit markets don’t reprice risk as quickly as equity markets.Debtors need dollars now. These companies have typically resorted to raising more debt to refinance the old. They won’t be able to continue like this. Not only has it gotten prohibitively expensive, it’s hard to find buyers at this point. Take real estate developers. They make up around 60% of the outstanding bonds and primarily rely on onshore yuan revenue from advanced payments and deposits on purchases. With sales down sharply, that cash is waning and swapping it to dollars costs more. Further, regulations restrict raising debt for refinancing. This month, developers have around $4 billion coming due, with smaller repayments until November, when $6.7 billion must be repaid. That comes as companies across emerging markets are staring at $19 trillion in maturities of dollar and local currency loans and bonds over the course of 2020.Even with the People’s Bank of China willing to provide various lifelines, private enterprises’ funding costs remain elevated. Raising more debt in domestic capital markets to repay dollar obligations isn't easy or cheap. Onshore, state-backed borrowers are pushing out smaller ones and flooding the new issuance space.Defaults have been ticking up as Beijing goes into forbearance mode. Estimates from the Institute of International Finance suggest that companies with majority state ownership comprise over 35% of non-financial firms’ debt in China. Add in those with any government backing, and it’s more than 80%. Will Beijing step in for all? Unlikely, but it’s still on the hook for a significant chunk. While onshore investors are agreeing to extend payment terms and to exchange debt for equity, holders of foreign bonds are unlikely to be so forgiving.Tapping Chinese banks for funds isn’t straightforward. They don’t have dollars to hand out en masse. Of the $788 billion of total foreign currency deposits held by financial institutions, $377 billion are corporate deposits. That’s down from a peak two years ago. Banks have more than $800 billion of foreign currency loans on their books. Along with the lending for China’s Belt and Road Initiative, the virus-induced economic shock and rising bad debts mean banks will have to be selective. Investors usually find comfort in the PBOC’s war chest of $3.1 trillion in foreign exchange reserves. Sure, it could — and will — step in to ease the dollar-funding pressure on banks. But the moment the lender of last resort starts tapping reserves, sentiment will be hit, and then it's a question of resilience.In addition, these reserves are held in U.S. Treasuries, agency bonds and the like. Only about $18 billion, or 0.5%, are in cash deposits, mostly at commercial banks, according to HSBC Holdings Plc analysts. Selling those as the broader credit market tanks would only drive more market jitters. Unlike many central banks, China’s doesn’t have a swap line with the U.S. Federal Reserve. So how far will the central bank go?There are other pressure points. The dollar shortage will hit trade credit, crucial for China Inc.’s exports and underlying businesses. In periods of dollar strength and shortage, this leads to outflows as overseas financing to buy Chinese goods dries up. As Rhodium Group’s Logan Wright says, “In the 2008 crisis, this was very severe as trade-credit liabilities were paid down and credit lines were cut.” This time, he says, a dollar shortage in this type of credit would probably lead to “a sharper-than-expected decline in China’s exports” over the next few months. At some point, the credit risk becomes entrenched in balance sheets and coming back is hard. The longer these dislocations last, the worse they get. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
UK banks are stepping up fraud prevention measures to protect customers from scammers eager to exploit the coronavirus pandemic with a whole range of new tricks, including fake sales of medical supplies and bogus government relief schemes. With British households effectively on lockdown, some banks said customers had already been caught out by fraudsters posing as banks, government and even health service providers to persuade victims to hand over passwords or other sensitive data. Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland have launched social media campaigns to flag ploys.
The shock from coronavirus to banks is set to be greater but less prolonged than lenders faced in last year's stress test and the financial system remains resilient, the Bank of England said on Tuesday. "Major UK banks are well able to withstand severe market and economic disruption," the BoE's Financial Policy Committee said in a statement from meetings it held on March 9 and March 19. The FPC had already announced that banks can use the capital they hold in their counter cyclical capital buffers (CCYB) to support lending worth up to 190 billion pounds and it indicated on Tuesday that banks could go further if needed.
HSBC UK has announced three new measures to further its package of support for businesses dealing with the economic impact of the coronavirus pandemic.
(Bloomberg Opinion) -- Banks are thankfully in much better shape to face the coronavirus pandemic than they were before the financial crisis. But as the economic challenge they face grows, regulatory measures to help them that looked overly forgiving just a few weeks ago may prove to be just the start.In 2008-2009, the financial sector’s woes dragged down the real economy. Now it is the other way round. Supervisors are looking to financial institutions to be part of the solution to a real-world shock. Lenders on the whole are far better capitalized and their balance sheets included a good portion of easy-to-sell assets going into 2020.As forecasts for the severity of the economic downturn are worsening, so are the prospects of banks coming through the crisis intact. Expectations for a sharp “V-shaped” recovery are fading amid the realization that social distancing – and economic activity – will lead to a slump that could last several quarters. There is no visibility as to when or how quickly economic activity will resume.Deutsche Bank AG analysts forecast an annualized GDP contraction of 24% in the euro area and 13% in the U.S. in the second quarter. At this rate, the decline would be more than one and a half times greater than the financial crisis.Even with considerably more equity than a decade ago, banks remain inherently levered institutions. Borrowings of banks from JPMorgan Chase & Co. to Deutsche Bank AG to HSBC Holdings Plc exceed their capital by more than 15 times. Stress tests show the biggest lenders have sufficient capital, but it’s debatable whether these assessments capture the magnitude of the downturn ahead. Nor do they model the implications of the synchronized shutdown that is paralyzing large, interconnected economies.In the U.S. stress tests last year, banks’ resilience was measured against a real GDP decline of 8% from the pre-recession peak and a surge in the CBOE Volatility Index, or VIX, to 70. The index, often referred to as the fear gauge, soared past 80 this week for the first time since 2008.The Institute of International Finance estimates that at $75 trillion non-financial corporate debt is worth around 93% of global gross domestic product, up from about 75% of GDP before the financial crisis, with some of the highest burdens in sectors with weak earnings, such as small and medium-sized companies.Analysts at Goldman Sachs Group Inc. estimate that if credit lines across travel, commodities and energy get fully drawn, the liquid assets held by the top U.S. banks to cover draw-downs would come close to regulatory minimums. Executives from UBS Group AG, Credit Suisse Group AG and Deutsche Bank told a virtual conference this week they’re seeing clients drawing on credit lines, regardless of whether the cash is needed now.To be sure, central banks and governments have raced to ramp up their stimulus and are taking steps to ensure credit keeps flowing to the economy. From cutting interest rates, to resurrecting a commercial paper backstop, in a matter of days the U.S. Federal Reserve has gone through the financial crisis catalog of fixes.Even against that backdrop, banking supervisors rightly see the need to be accommodating with lenders. Post-crisis measures, some of which were designed to be eased in times of economic slowdown, are being rolled back. Banks will be allowed to let capital ratios fall - an inevitable function of assets going bad - and in Europe stress tests have been postponed.Regulators in Europe are also reportedly considering giving banks more time to set aside provisions for loans that will undoubtedly sour.At first, such measures looked like potentially detrimental regulatory forbearance. Perhaps not now. Deutsche Bank warned on Friday it may be “materially adversely affected” by a protracted downturn. As the economic impact of radical steps to curb the coronavirus worsens, the challenge will be to keep the banking sector part of the solution rather than part of the problem.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The European Union's markets watchdog said it may not be "practicable" to record all telephone calls for trading securities because of the coronavirus epidemic. Under EU law, traders must record calls when trading but banks have shut down their main trading floors, forcing dealers to work from back-up sites or even from home, making it harder to record all calls.
The Bank of England said on Friday it was cancelling this year's stress test of eight major banks and building societies to enable them to focus on providing lending through the coronavirus crisis. "The recent 2019 stress test showed that the UK banking system was resilient to deep simultaneous recessions in the UK and global economies that are more severe overall than the global financial crisis, combined with large falls in asset prices and a separate stress of misconduct costs," the BoE said. The BoE also said it was delaying other regulatory reports on bank liquidity and climate risk, and a study into open-ended investment funds.
LONDON/HONG KONG (Reuters) - One of Noel Quinn's first jobs as chief executive of HSBC will be to review the radical revamp he unveiled last month as interim boss, a senior source at the bank said. Quinn's decisive move to slash costs proved instrumental in securing him the top spot at Europe’s largest lender but those plans, including the axing of 35,000 jobs and shuttering of underperforming businesses, may prove difficult to implement while the world grapples with the fallout from the coronavirus pandemic. "You can't fire a trader in Europe over the phone when he is either working from home or taking care of a sick family member," a second HSBC source said.
(Bloomberg Opinion) -- The virus-induced fall in global stocks has suddenly called one of Europe’s biggest tech deals of 2019 into question.An 80% decline in AMS AG’s share price since February is undermining efforts to fund the final slice of its 4 billion-euro ($4.4 billion) takeover of German lighting group Osram Licht AG. It’s testing a seldom invoked deal-making provision buried in the small print.AMS, which makes laser components for the iPhone’s facial recognition system, is midway through an effort to sell 1.7 billion euros of new shares in a rights offer to pay for Osram. It will be tough to fund the whole deal ultimately with debt. When the terms of the share sale were announced a week ago, the price of the new stock was set at 9.20 Swiss francs.That was a 64% discount to the then share price, which had long been anticipating the fundraising. Coronavirus was no secret at the time and markets were already falling, and these wide terms seemed to acknowledge as much.Since then, however, AMS shares have continued their downward trajectory, and were trading below 9 francs on Wednesday. Investors are now being asked to buy AMS shares above the market price to clinch a risky takeover in challenging times. It’s hard to see them being keen. No wonder Osram shareholders are getting worried AMS will not fulfill its bid – the German firm’s shares have also fallen sharply.Normally, AMS would be able to count on the banks underwriting the share offer – HSBC Holdings Plc. and UBS Group AG – to buy any stock not taken by investors. The snag is that the underwriting agreement includes a so-called material adverse change clause, which allows the banks to walk away in the case of any “calamity or crisis or development involving a prospective change in national or international financial, political or economic conditions in any country”.The markets see that as a get-out. The virus could detrimentally affect demand for the smartphones for which AMS supplies components, and the automotive industry – Munich-based Osram’s key end market.It’s a highly uncertain situation. In a worst-case scenario the banks could be left holding roughly 70% of AMS, although they are likely to have passed on some of their commitment to hedge funds. Getting a controlling stake might even necessitate a mandatory takeover bid. The incentives for the banks to try wriggling off the hook are high.AMS can still fund the deal in the short term because it has bridge financing. But it will have to repay those loans before long. It’s not clear if AMS shareholders wouldn’t mind letting the deal fall apart. What’s not in doubt is that Osram and its shareholders would be furious if that happened, and would almost certainly chase AMS in the courts – there doesn’t seem to be a material adverse change clause in the actual takeover offer. Still, the bidder might prefer a legal battle to turning to the debt markets to pay for the transaction at considerably more cost.The takeover battle itself was a drawn-out, messy affair. Its closing risks becoming messier still.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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(Bloomberg Opinion) -- Noel Quinn’s appointment as chief executive officer of HSBC Holdings Plc was all but inevitable. Europe’s biggest bank did itself no favors by taking seven months to make the decision. It’s good that it has acted at last: No lender the size of HSBC should be comfortable heading into a financial crisis with a caretaker CEO.HSBC approached at least three outsiders for the CEO role after ousting John Flint in August, leaving Quinn in charge on an interim basis. Citigroup Inc. veterans Stephen Bird and James Forese, and Unicredit SpA’s Jean Pierre Mustier all ruled themselves out of contention. Flint was axed after only 18 months in the role, having failed to satisfy Chairman Mark Tucker that he was doing enough to revive growth at the London-based and Asia-focused bank.The frustrated CEO search led to the bizarre situation of having an interim chief present the bank’s most radical overhaul in years, a plan that includes as many as 35,000 job cuts and a $100 billion reduction in gross assets. No outsider would be scrambling to lead the bank after such big decisions had already been taken, leaving Quinn the likely pick, as I wrote at the time. Exactly one month later, HSBC has come to the same conclusion.As a 33-year veteran of HSBC, Quinn represents continuity and stability. Both are welcome. The landscape looks vastly different than when Tucker became the first outsider to helm the bank on on Oct 1, 2018. Former CEO Stuart Gulliver, Flint’s predecessor, had already started the tough work of trimming of one of the world’s most bloated banks. HSBC had cut tens of thousands of jobs, exited at least 80 businesses, and was back in analysts’ good books. Interest rates were rising in Hong Kong, its single largest market, as the U.S. Federal Reserve moved to normalize policy.Two-and-a-half years later, the coronavirus pandemic is making a mockery of forecasts of how the world would look. Interest rates are back at zero, credit markets are tightening and dollar funding is freezing up in an uncomfortable echo of the 2008 credit crisis. The Fed already began cutting borrowing cuts late last year as the U.S. economy weakened, hitting net interest margins of banks across the world.If the financial turmoil unleashed by the virus proves as severe as the crisis of 12 years ago, then experience will be at a premium. Quinn has the advantage of having been with HSBC through that period. Tucker’s banking experience, by contrast, is limited to a couple of years at HBOS Plc in the early 2000s, a non-executive role at the Bank of England and a period on the board of Goldman Sachs Group Inc.With the global economy heading into recession, no bank will be left unscathed. HSBC said last month it could see an additional $600 million losses if the virus outbreak extends to the second half of the year. It is at least in a stronger position to ride out the crunch than many banks. HSBC is liquid, with plenty of deposits, especially in its Hong Kong. Its mortgage loan book in Hong Kong looks secure, with the city’s real estate market having proved resilient so far. And its size and geographic spread ensure access to dollar funding.Amid these challenging conditions, Quinn’s appointment has come in less than ideal fashion, with his extended probation making clear that the board harbored doubts about his suitability. The next few months will be a test of his safe hands. He won’t be the only HSBC leader to be tested. After such a clumsy search for its next CEO, investors may feel that Tucker deserves scrutiny, too. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
LONDON/HONG KONG (Reuters) - HSBC Holdings PLC has appointed Noel Quinn as chief executive officer, handing the insider and interim boss the reins of Europe's biggest bank and ending months of speculation an external candidate could get the role. Quinn takes the helm as the London-headquartered bank faces a challenging outlook, with the impact of the coronavirus pandemic adding to its longstanding underperformance in the United States as well as struggles in investment bank. The bank makes 90% of its profits in Asia, and the sharp economic downturn in its main markets of Hong Kong and China are also expected to dent its revenues and asset quality in the near to medium term.
An accounting rule introduced after the global financial crisis faces its first big test as banks seek relief in the face of government calls to keep coronavirus-hit borrowers afloat. Known as IFRS9, it is mandatory in over 100 countries, including the European Union and Britain, but not in the United States, where there is a tougher version with full upfront provisioning for expected losses. "Obviously IFRS 9 is an issue for us and all banks in terms of how we recognise any provision," Alison Rose, chief executive of the Royal Bank of Scotland, said on Tuesday.