HSBA.L - HSBC Holdings plc
| Previous close | 397.20 |
| Open | 409.15 |
| Bid | 414.95 x 0 |
| Ask | 415.05 x 0 |
| Day's range | 406.05 - 417.20 |
| 52-week range | 5.76 - 741.00 |
| Volume | 23,382,517 |
| Avg. volume | 51,004,910 |
| Market cap | 84.535B |
| Beta (5Y monthly) | 0.64 |
| PE ratio (TTM) | 14.02 |
| EPS (TTM) | 29.60 |
| Earnings date | 28 Apr 2020 |
| Forward dividend & yield | N/A (N/A) |
| Ex-dividend date | 27 Feb 2020 |
| 1y target est | 9.20 |
- Reuters
HSBC Hong Kong shareholders mull legal action over dividend suspension
HSBC shareholders in Hong Kong are calling for an extraordinary meeting with the bank's management and considering legal action against its decision to scrap dividend payments. HSBC and other top British banks on Wednesday announced the suspension of dividend payouts after pressure from the regulator to conserve capital as a buffer against expected losses from the coronavirus crisis. Founded in Hong Kong about 150 years ago as Hongkong and Shanghai Banking Corp, Europe's biggest bank by assets has a large number of small shareholders in the city who have long benefited from the bank's stable dividend payments.
- Reuters
HSBC HK shareholders mull legal action over dividend suspension
HSBC shareholders in Hong Kong are calling for an extraordinary meeting with the bank's management and considering legal action against its decision to scrap dividend payments. HSBC and other top British banks on Wednesday announced the suspension of dividend payouts after pressure from the regulator to conserve capital as a buffer against expected losses from the coronavirus crisis. Founded in Hong Kong about 150 years ago as Hongkong and Shanghai Banking Corp, Europe's biggest bank by assets has a large number of small shareholders in the city who have long benefited from the bank's stable dividend payments.
- Bloomberg
Dividend Halt Puts HSBC at Risk of Losing Core Investors
(Bloomberg) -- HSBC Holdings Plc’s dividend suspension threatens to cost the lender some of its core investor appeal in Hong Kong.Payouts have been an important reason to own HSBC shares in the city. Its stock price has lagged the Hang Seng Index by more than 600 percentage points since 1986, the earliest available Bloomberg-compiled data from when a unified Hong Kong exchange commenced. But including dividends, HSBC’s total return is more than double the Hong Kong benchmark’s in the period.Shareholders have started mobilizing. A group on Facebook Inc., called the HSBC Shareholders Alliance was recently established to call for legal action against the halted payouts. The group has contacted more than 3,000, or about 2%, of the lender’s shareholders and is demanding a scrip dividend in place of the canceled cash distribution, it said Monday afternoon. A scrip gives investors the option to receive dividends in the form of equity.The stock was a market darling as recently as 2017, thanks to prospects for higher borrowing costs from the U.S. to Asia that makes lending a more profitable business. The monetary-policy environment has flipped, with central banks around the world slashing key lending rates to cushion the economic shocks triggered by the coronavirus.HSBC’s yield has been constantly higher than Hang Seng members as a whole. But it will be zero this year after the bank and peers said they won’t make dividend payments in the face of U.K. regulatory pressure. HSBC Chief Executive Noel Quinn expressed regret last week to shareholders about the suspension. Shares closed 2.8% higher Monday in Hong Kong, rebounding from an 11-year low.Here are some charts further illustrating how views have changed on HSBC.Options marketEven after a 17% slump last week, the most since 2009, investors want to protect against further losses. Bearish HSBC options remain near their most expensive level in a decade versus bullish ones.Analyst recommendationAnalysts’ average rating on HSBC shares was lowered by the most last week since 2009. The stock has 11 sell ratings from analysts tracked by Bloomberg, easily the most among the 50 members of the Hang Seng.Sliding down the tableHSBC ended 2019 with the Hang Seng’s sixth-highest market value. But with the stock’s 36% slump to start this year, the bank is now worth less than HK$800 billion ($103 billion), below Bank of China Ltd., PetroChina Co. and AIA Group Ltd.Mainland supportTo be sure, HSBC shares are still favored by mainland-based investors. As the stock posted its biggest daily drop in Hong Kong since 2009 at 9.5% on April 1, mainland traders bought a net HK$434 million of shares through exchange links between the city and Shanghai. The connection has been closed since then due to a holiday and will reopen Tuesday. Sizable purchases last month pushed mainland investors’ ownership of HSBC shares to the highest in at least three years, according to data compiled by Bloomberg.(Updates stock price and adds CEO comment in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Reuters - UK Focus
HSBC HK shareholders mull legal action over dividend scrapping
HSBC shareholders in Hong Kong are mulling calling for an extraordinary meeting with management and taking possible legal action against the bank's scrapping of dividend payments. HSBC and other top British banks on Wednesday announced the suspension of payouts after pressure from the regulator to save their capital as a buffer against expected losses from the economic fallout from the coronavirus pandemic. Founded in Hong Kong about 150 years ago as Hongkong and Shanghai Banking Corp, Europe's biggest lender by assets has a large number of small shareholders in the city who have long benefited from the bank's stable dividend payments.
- Bloomberg
JPMorgan Among Banks Delaying Internships or Moving Them Online
(Bloomberg) -- Firms including JPMorgan Chase & Co., HSBC Holdings Plc and Nasdaq Inc. are making changes to their summer internship programs, including delaying their start, making them shorter or moving them online, as the coronavirus pandemic shifts work arrangements across the finance industry.JPMorgan pushed back the start date of its internship program to July 6, and is exploring a virtual format if necessary for safety reasons. The incoming class of more than 3,000 interns globally will still be paid for full nine-to-10-week internships despite the program being shorter than planned, a company representative said.Finance internships typically last nine to 12 weeks and include orientations, guest-speaker events and group projects -- collaboration limited by stay-at-home orders in cities around the world aimed at combating the virus’s spread. Companies are grappling with how to handle interns and post-graduate recruits who are generally given summer offers months in advance.Nasdaq said Friday that its summer program would be fully virtual, following Capital One Financial Corp., which was the first major U.S. bank to move its program online. Capital One said earlier this week that it will still pay its 1,000 interns the full amount outlined in their offer letters, including housing stipends.HSBC pushed the start date of its internship and post-graduate programs, which were set to begin in June and July, respectively, to later in the year. The London-based bank offers internships and graduate programs in locations including Singapore, China, the Middle East, the U.S. and the U.K., according to its website.“We understand that prospective candidates may be disappointed,” the company said in an emailed statement. “However, we’ve made this decision to safeguard our current and future workforce.”Bank of America Corp. said this week that its 2,000 summer interns and 1,000 campus recruits will start as scheduled in June and July, respectively. The lender didn’t specify whether the new hires would work remotely, saying it would finalize plans for bringing them on board later.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Yahoo Finance UK
Coronavirus: HSBC and Co-op to offer interest-free £500 overdrafts
The banks said that they would temporarily increase the interest-free buffers on overdrafts for millions of their customers.
- Reuters - UK Focus
INSIGHT-Crisis haunts British banks in coronavirus relief effort
With the future of many coronavirus hit firms in their hands, British banks, still scarred by the financial crisis, are worried that they are being asked by a desperate government to make loans that will never be repaid. This caution, combined with the challenges of an unprecedented demand for loans, is testing the British public's fragile faith in the lenders, which have spent a decade trying to rebuild their battered reputations and capital positions. "We've got to only make loans that we can reasonably believe people will be able to repay after the crisis has gone; to businesses which will still be there," Ian Rand, who runs business lending at Barclays, told Reuters.
- Bloomberg
HSBC Refugees May Find a Stable Home in China
(Bloomberg Opinion) -- China’s banks may be about to assume the mantle of the ultimate widows-and-orphans home for Hong Kong’s small investors.For decades, HSBC Holdings Plc has held that status — a reliable provider of investor income that even carried on paying dividends through the global financial crisis in 2008-2009. Hong Kong’s biggest bank hadn’t missed a payout in Bloomberg-compiled data going back to 1986. That changed Wednesday when London-headquartered HSBC scrapped its interim dividend in response to a request from the Bank of England. The lender’s stock plunged 9.5% in Hong Kong, the most in more than a decade.It’s difficult to overstate the importance of HSBC to individual investors in the city where it was founded more than 150 years ago. The stock is unusually widely held. Institutions own just 61.5% of the shares, compared with 94% for Standard Chartered Plc, HSBC’s London-based and Hong Kong-listed rival. Standard Chartered also cancelled its dividend along with other British banks after the BOE called on them to conserve cash amid the coronavirus pandemic.HSBC’s dependable payouts have also been a lure for institutional investors. Shenzhen-based Ping An Insurance Group Co., the bank’s second-largest shareholder, cited the dividend as an attraction for taking its 7% stake. Mainland Chinese investors will also be feeling the pain: As much as 8.2% of HSBC’s Hong Kong-listed stock sits with investors who bought via trading pipes that connect the city’s exchange with counterparts in Shanghai and Shenzhen. That’s risen from about 2% three years ago.HSBC said it would cancel an interim dividend slated to be paid this month and make no payouts or buybacks until at least the end of the year. That raises the question of where investors will turn in search of the stable income that they used to take for granted from HSBC. The answer may lie in the bank’s giant, state-controlled rivals across the border in mainland China.That might seem surprising. Shares of Industrial & Commercial Bank of China Ltd., and three fellow Chinese lenders that are members of Hong Kong’s benchmark Hang Seng Index, have languished over the past decade. Their poor performance reflects investor concerns that China’s post-financial-crisis buildup of debt will eventually lead to a surge in bad loans. ICBC’s Hong Kong-traded shares are 13% lower than they were a decade ago, and Bank of China Ltd. has slumped 27%. While China Construction Bank Corp. has lost only 1%, Bank of Communications Co. has fallen 44%.Yet all have been steady dividend payers. Including dividends, ICBC has returned 46% in the past decade, Construction Bank 65% and Bank of China 28%. Only Bocom has lost money for its investors. The four banks have typically traded at high dividend yields over that period. Yields for ICBC, Construction Bank and Bank of China have all averaged more than 5%, with peaks higher than 8%. Elevated yields often indicate that investors expect payouts to be cut or omitted altogether, but dividends have actually been rising at the Chinese banks in recent years.China’s opaque financial system and the state-owned banks’ status as policy tools of the government have helped to deter some investors. Yet with the coronavirus shutting down economies from the U.S. to Europe and pressuring financial systems, it’s debatable whether Chinese institutions should be seen as any more risky than their overseas counterparts. For one thing, having been first into the coronavirus outbreak, China’s economy is also the first to start getting back to normal. For another, the government has an incentive to ensure that the banks keep paying dividends because it relies on that income to fund social security spending. An unofficial rule has mandated the big state banks to pay at least 30% of their profits out as dividends, another reason to be sanguine that payouts will be sustained.In 2016, HSBC chose to keep its headquarters in London rather than move back to Hong Kong, a call that it may now be tempted to revisit. It would be ironic if a decision by its adopted jurisdiction helped send shareholders in the bank’s home city — and biggest market — scurrying into the hands of Chinese rivals. 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.
- Yahoo Finance UK
Chancellor to overhaul £330bn coronavirus business loan scheme after backlash
Banks have been criticised for being too slow and in some cases profiteering through the government's coronavirus business interruption loan scheme.
- Reuters - UK Focus
Britain says Basel bank rule delay will aid response to coronavirus
Delaying remaining elements of new global bank capital rules for a year will give lenders in Britain time to focus on dealing with fallout from the coronavirus epidemic, the Bank of England and Britain's finance ministry said on Thursday. "This will provide operational capacity for banks and supervisors to respond to the immediate financial stability priorities from the impact of Covid-19," the BoE's Prudential Regulation Authority (PRA) and finance ministry said in a joint statement. The PRA and finance ministry said they were committed to the full, timely and consistent implementation of the new rules and "we will work together towards a UK implementation timetable that is consistent with the one year delay".
- Reuters - UK Focus
Britain's FCA proposes temporary financial relief for customers
- Bloomberg
Scrambling for Cash? Cut Out the Middle Man
(Bloomberg Opinion) -- The scramble to replace vanishing revenue is forcing businesses to take extreme measures. In the U.K, a firm recently broke the revered convention that a company shouldn’t dilute its shareholders by hurriedly selling a massive stake in itself in the open market. It saved on bankers, lawyers, time and paperwork. One week on, this maverick approach has gained official acceptance.Normally a big corporate share sale is about cutting debt or paying for a big takeover. There’s plenty of time to do this properly via a so-called rights offer: the lengthy process whereby investors get priority allocation on any new stock being sold (hence the “rights”). Today’s need for equity is different. Many companies suddenly have zero cash coming in due to measures aimed at combating the coronavirus. Their lenders may not help unless shareholders dig deep too. There’s no time to lose.The solution that’s emerged is to flout British custom and follow U.S. practice instead: Just sell a big slab of shares, ideally to existing shareholders, but ultimately to whomever will take them. After all, anti-dilution protection is not enshrined in U.K. law but in guidance stating that share sales of more than 10% of the company should essentially be via rights offers. That guidance was sensibly revised on Wednesday, with the threshold lifted to 20% over the next six months. Bosses will need to explain why they’re forgoing a rights offer and still try hard to raise the equity from existing owners.Airport caterer SSP Group Plc blazed the trail last week and sold a 20% stake in the market for 216 million pounds ($268 million). HSBC Holdings Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc simultaneously agreed to lend it 113 million pounds. Each slab of cash appeared to rely on the other being committed.Sticking with the old guidance was not a realistic option. Investment banks could have agreed to underwrite a “standby” rights offer at a price so low it would have wiped out existing shareholders, for a tidy fee. With that backstop secured, an orderly fundraising might have been possible, for another fee. But SSP’s share price would have subsequently tumbled, and the proceeds would have taken weeks to land. Lenders could have then charged the earth for bridging the financing gap.Why ever bother with a rights offer if you can just do what SSP did? Should nimble share placings become the norm? One argument against this is that small shareholders still get diluted. However in this case, they actually did OK: SSP shares rallied. The institutional shareholders who bought the deal paid a premium to SSP’s prior-day share price; there was no VIP bargain. Moreover, speedy share placings could also be made subject to clawback by smaller holders, with some tweaks to the current documentation requirements.The real problem is many firms will need to raise even more than 20% of their share capital this year. Share offerings that big require a chunky prospectus anyway under European regulations. And at that size, the case for ignoring anti-dilution rights is weaker.Shareholders know multiple demands for cash are looming. Companies should form an orderly queue, ask for no more and no less than they need, and choose their methods accordingly.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.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.
- Reuters - UK Focus
Some UK finance firms mis-using 'key worker' status - union
Some financial firms are defining an unnecessarily large proportion of staff as "key workers" to ensure they can still come into the office or branch to work, according to a union representing thousands of bank employees. Together with healthcare workers, supermarket employees and delivery drivers, bank staff deemed vital to the stability of the UK economy have been granted freedoms to travel to their workplaces, under terms of a lockdown which began on March 20. Some employers have applied the special status excessively across their workforces, increasing risks to staff health, according to the Unite union whose membership includes bank branch employees and call centre workers.
- Reuters - UK Focus
LIVE MARKETS-European shares kick off quarter in negative territory
You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London. Europe's bourses have started the second quarter in negative territory as investors get more evidence the global economy is heading to a deep recession. The pan European index sank 3.2% with the travel and the banking sectors leading the losses.
- Reuters - UK Focus
UK investors tell companies to rethink bonuses if scrapping dividends
Britain's investment managers would expect banks and other companies to rethink bonuses if they are scrapping payouts to shareholders, the Investment Association said on Wednesday. Top UK banks have scrapped dividends for 2019 and interim dividends for 2020 after being asked to do so by the Bank of England, with other firms also stopping payouts as the economy remains in lockdown. The current situation should, however, not be used to "rebase or reduce" dividends unneccesarily, IA Chief Executive Chris Cummings said in a statement.
- Reuters - UK Focus
British insurer M&G drops plans for 10% job cuts this year-memo
- Reuters - UK Focus
Hundreds of loans have been made under UK coronavirus scheme - Treasury
- Bloomberg
Banker Bonuses Are a Pre-Coronavirus Thing
(Bloomberg Opinion) -- Financial regulators are applying all of the lessons of the 2008 credit crisis at record speed. In the past few weeks, they’ve worked with central banks to pump liquidity into markets and to make it easier for banks to lend. It’s essential now that lenders keep providing money to companies and households whose incomes have evaporated in the Covid-19 lockdowns. If the banks stop functioning, what hope for the rest of the economy?The next chapter in European regulators’ crisis playbook is ensuring that the banks don’t hand much of their excess capital to investors or keep paying hefty bonuses to senior staff. Supervisors are trying to make sure that financial firms remain solid by easing their capital rules, thereby freeing up hundreds of billions of dollars — that places a heavy burden on the banks to act responsibly. Shares in British banks, including HSBC Holdings Plc and Barclays Plc, fell sharply on Wednesday after they halted dividends at the Bank of England’s request.Regulators are also preempting a popular backlash by discouraging cash bonuses to bankers. This makes perfect sense, given the support that lenders have already received by way of looser regulation and state loan guarantees.As we’ve heard from supervisors and banking executives in recent weeks, banks — for now — remain part of the solution to the unprecedented economic shock, rather than the problem. This isn’t 2008.The excessive banker pay that fueled the risk binge in the run-up to the Lehmans meltdown is still fresh in people’s minds. What’s more, during the global financial crisis, banks often took too long to suspend dividends and buybacks, leaving themselves thinly capitalized as losses piled up and hastening the need for government bailouts. Excessive pay during and soon after the crisis, including at bailed-out institutions, rightly infuriated the taxpayers that were left footing the bill.More than a dozen years after the financial crisis, a number of Europe’s biggest lenders — Royal Bank of Scotland Group Plc, ABN Amro Bank NV and Commerzbank AG — are still at least partly state owned. Little surprise then that the U.K. regulator “expects banks not to pay any cash bonuses to senior staff, including all material risk takers,” while the European Banking Authority is urging firms to pay conservative bonuses and consider deferring awards for a longer period and in shares.It could be worse. While bankers won’t be able to cash in on their deferred compensation from previous years’ share awards after stocks plunged, they will have already received their 2019 variable cash compensation by now, and they’ll have plenty of time to prepare for next year.Take the 1,700 traders and bankers at Barclays, who’ll be affected by the measures. About 45% of their average pay of 825,000 pounds ($1 million) consists of fixed pay, 22% comes from share awards, and 23% is a cash bonus (of which 58% is deferred), according to Citigroup Inc. analysts. While cash is king — especially during an economic crisis — getting more of that pay package in shares wouldn’t necessarily be a disaster, even if people had to wait a few years to sell. Assuming stocks don’t bounce back too far from their current levels, bankers might be getting a lot of very cheap stock in 2021.And however painful the hit, regulators are probably just insisting on something that the markets will probably take care of over the rest of the year anyway. The first quarter may have been a bumper three months for trading in financial markets because of all of the volatility, activity could well be subdued over the coming quarters as the recession really hits. That would depress bonuses anyway. The very best financiers will expect to see their fixed pay rise to sweeten the blow, but for most of the thousands of bankers and traders fortunate enough to keep their jobs, lavish compensation will be a thing of the past. The crisis will be as Darwinian for investment banking as it is for every other pocket of the economy. Hanging on to your chair will be your 2021 bonus.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.
- Reuters
Weak demand for AMS fundraising highlights Osram deal doubts
Weak demand for sensor maker AMS's share issue this week has highlighted investors' doubts about the company's ability to cope with its takeover of German lighting group Osram . Low take-up of the Austrian group's capital increase by investors forced underwriting banks UBS and HSBC to take a combined 15% AMS stake. Swiss-listed AMS shares fell more than 12% to a nearly eight-year-low of 8.35 Swiss francs on Wednesday.
- Reuters - UK Focus
UBS, HSBC left with big AMS stake after low demand for share sale
UBS and HSBC will hold a combined 15% stake in AMS after demand for the sensor maker's share sale was so low they had to buy up stock as underwriters of the deal, AMS said in a statement on Wednesday. Switzerland's UBS and Britain's HSBC also provided, along with Bank of America Merrill Lynch, a 4.4 billion euro bridge loan for the Osram purchase.
- Bloomberg
U.K. Lenders Confront Biggest Mortgage Test Since 2008 Crash
(Bloomberg) -- British mortgage providers, frustrated that sales volumes failed to match the highs before the global financial crisis, spent the last two years cutting margins and taking on riskier buyers. With the pandemic now hanging over house prices, they’re about to find out if their customers are as solid as they thought.Values soared following the 2008 crunch, helped by government programs to boost demand and low borrowing costs. Then lenders relaxed standards in a scramble for business as Brexit deterred buyers, leading Sam Woods, chief executive officer of the Prudential Regulation Authority, to warn last May that regulators should be “watching them like a hawk.”Now Britain’s economy has been upended by the coronavirus: Bloomberg Economics forecasts a recession in the first half. The government and the banks have rushed to help homeowners affected by the crisis, offering mortgage holidays and income support, but home prices are still forecast to fall by as much as 10% this year.“We’ve got the overall stop in the economy, we’ve got the financial crash, and we’ve got people losing their jobs and their earnings,” said Neal Hudson, an independent housing analyst. “In normal times, any one of those would be enough to cause a correction in house prices. This time it’s impossible to know what will happen.”The economic paralysis could cost as many as 700,000 jobs, taking the unemployment rate to 6%, the highest for six years, according to Dan Hanson and Jamie Rush of Bloomberg Economics.The blow will fall hardest on those least able to afford it. The greatest proportion of lending against minimal deposits took place in the north of England, where about half of adults have less than 2,000 pounds (about $2,500) in cash savings, and three-quarters have no investments.The economically deprived region is already vulnerable to shocks like Brexit, backed by a majority of voters in the region despite its reliance on export-oriented manufacturing. The north was swayed by election promises from Prime Minister Boris Johnson’s Conservative Party to boost spending on public services and infrastructure.Home values in northern England historically have been more volatile than in London, tending to fall further and stay down longer. Residential prices in the northeast, the only region in England where prices remain below their 2007 peak, fell 2.6% in January after a 0.5% monthly gain in December, government data show.Slim Deposits(Proportion of small deposit loans by region)Help to BuyA key underpinning of the market after the financial crisis was Help to Buy, a loan program that has advanced about 14.3 billion pounds to buyers with small down payments. It was called “moronic” by Societe Generale SA analyst Albert Edwards when it was introduced because it encouraged over-borrowing, and the regulator warned in February that users of the program were potentially more exposed than others to any deterioration in the economy.Under the plan, also disparaged as Help for Homebuilders because it boosts demand rather than supply, the state provides an interest-free loan of as much as 40% of a new home’s cost for five years in return for a stake in any increase in value during that period. The home must cost 600,000 pounds or less, and sales below the purchase price are allowed.That leaves the government open to losses if prices fall and borrowers decide to move on, either because they can no longer make mortgage payments or because they opt for a similar property at a lower price in a slumping market. More than half of those who used Help to Buy had deposits of 5% or less.The program might make a small loss after inflation, the Department of Housing said last year. That was before the pandemic threatened to push the housing market into turmoil. Losses could spiral if prices fall or interest rates increase, the former head of the Housing and Finance Institute, Mark Boleat, told a parliamentary watchdog committee.Still, the loan program is tiny set against the hundreds of billions of pounds of coronavirus stimulus being offered by the government. And there are other positives: an economic recovery from the current crisis may be rapid, and tougher bank capital requirements have made them better risks than they were before 2008.“Help to Buy made sense between 2013 and 2017,” said Christine Whitehead, an emeritus professor of housing economics at the London School of Economics. “I don’t think there’s very much sense in it after that” because the market stabilized.While Whitehead doesn’t see large numbers of owners selling up, even in a downturn, “property people see prices coming back quickly, but I’m not convinced -- I don’t think anybody knows at this point.” Some homeowners may “sit on the loss until it disappears and, in the north, that could be one hell of a long time,” she said.Zero-Hour MortgagesOther vulnerabilities in the mortgage market could emerge. Banks and customer-owned lenders have been giving mortgages to workers on zero-hour contracts. They’re especially vulnerable now.In September, HSBC Holdings Plc said such workers could apply for a mortgage after finding a job and staying with an employer for a year, compared with two years previously.The changes made it easier for agency workers to get onto the property ladder and meant that “lending would be based on more accurate and up-to-date information,” the bank said in a statement.A property crash could wipe out equity for those with interest-only mortgages, making it more difficult to refinance. Terms expire by the end of this year for 126,000 of them, industry lobby group U.K. Finance said in June.Home loan providers are offering a payment holiday of as long as three months for customers, including those with interest-only mortgages, experiencing money issues as a result of the virus, according to U.K. Finance. Interest still accrues in the period.The market for new sales of British residential mortgage-backed securities has “essentially shut down” after spreads widened to “extreme levels,” Guernsey-based investment fund U.K. Mortgages said in a statement on Monday. The fund is currently trading at a 48% discount to its net asset value on Jan. 31.While many of the riskiest buyers have shunned mortgage borrowing since the financial crisis, “there will be some scandals, no doubt about it,” said Whitehead. For the lenders “there hasn’t been a mechanism of making any money really, so you’ve had to cut into other peoples’ demand,” she said. “So it’s a market share issue, just like it was in 2006, but in a much more frightening environment now.”(Adds HSBC example under Zero-Hour Mortgages sub-headline.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
This Light Bulb Deal Wasn’t Such a Bright Idea
(Bloomberg Opinion) -- HSBC Holdings Plc and UBS Group AG are having their loyalty to Austrian tech group AMS AG tested. The investment banks led the underwriting of a 1.8 billion-Swiss franc ($1.9 billion) share sale to support its takeover of German lighting group Osram Licht AG. That backstop became real yesterday after AMS’s shareholders failed to support the fundraising in full, leaving up to 38% of the shares having to be purchased by the banks.True, majority take-up is impressive in this market. The underwriters were also able to offload some of the residual holding overnight. But the fact remains that the banking syndicate was still left with shares worth around 500 million francs at the current market price, and a roughly 25 million-franc paper loss (ignoring their fees). And that’s not all. Having also lent to AMS to fund the rest of the 4 billion-euro ($4.4 billion) acquisition, the financing group now has a large debt and equity exposure to a single client. That ties up financial capacity at a time when other customers are drawing down credit lines.Investors are already testing the lenders’ tolerance for taking losses on the position. One tricky question now is the price at which the banks could unload such a large stake. Maybe there are some insurance arrangements with hedge funds to mop it up, but these could already have been exhausted. Or maybe a big strategic investor or activist could come to the rescue. There’s a chance to grab a big stake in AMS, which makes sensors and supplies the smartphone industry, on the cheap.Recall that it was a struggle to get this takeover deal over the line. After some work, AMS got to 60% of acceptances from Osram holders. It should now be relieved it secured more financing than it actually needed. Investors, largely hedge funds, held back some of their Osram shares hoping to hold AMS to ransom if it wanted to raise its position to 75% (or close enough to win such support in a shareholder vote). That’s the level where the Austrian company can get direct access to Osram’s cash flows so long as it agrees to pay a chunky dividend to remaining holdouts. AMS has no incentive to enter such an expensive operation today given Osram’s cash flow is going to be pretty weak this year.Is this just bad luck for all concerned? The situation was foreseeable in general, if not the specifics. The underwriting terms were fixed after the coronavirus had become a clear threat to global health and economic activity. The board of Osram voiced concerns about developments that could derail the fundraising. One risk was that the rights offer wouldn’t go ahead at all and AMS would have to pay for the deal entirely in debt. As it happens, AMS got the cash, but its business will now be under more pressure due to the impact of the pandemic-provoked global downturn. Still, its problems are now shared with shareholders in HSBC, UBS and those Osram investors who gambled on a very different outcome.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.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.
- Fool.co.uk
As HSBC (LON:HSBA) suspends dividends, here’s what I’d do in April
HSBC and other UK banking groups have just scrapped dividends. Here's what I'd do now.The post As HSBC (LON:HSBA) suspends dividends, here's what I'd do in April appeared first on The Motley Fool UK.
- Yahoo Finance UK
Banks forced to axe dividends and may cut bonuses over COVID-19 crisis
HSBC, Lloyds, Barclays, Royal Bank of Scotland, Santander, and Standard Chartered all said they would axe dividends after pressure from the Bank of England.
