Newspaper article The Evening Standard (London, England)

HSBC Sees End to Threat of Nationalisation to Banks

Newspaper article The Evening Standard (London, England)

HSBC Sees End to Threat of Nationalisation to Banks

Article excerpt


THE broking arm of Europe's biggest bank, HSBC, has posed a question for investors in the case of other High Street lenders u is it a case of goodbye, or good buy? HSBC is about the only bank that has not, so far, gone cap in hand to the Government or a sovereign wealth fund for extra cash, but it rules out the possibility of full-scale nationalisation for those that already have.

"With the immediate nationalisation threat removed, the risk/reward ratio for the banks looks significantly better," it said.

It is now clear that the Government does not want to fully nationalise UK banks, it added. It would only occur if there were a run on the banks or they ran out of regulatory capital.

HSBC estimates that provided equity tier one capital is allowed to decline to 5% over the next three years, then even with impairments at 300 basis points, Lloyds and RBS should still be able to afford high single-digit weighted risk asset growth.

There is additional risk to this outcome from continued writedowns on credit assets, but the proposed asset protection scheme could put a cap on the downside.

HSBC has raised Royal Bank of Scotland, 0.8p firmer at 21.2p, from neutral to overweight and raised its target from 15p to 35p. Barclays, down 1.5p at 93.4p, continues to be rated neutral with its target dropped 170p to 110p as does Lloyds Banking Group, 0.2p cheaper at 88p, which is cut from 130p to 90p.

The continued disruption to public transport brought by the biggest snowfall in London for 18 years, continued to take a toll on attendance levels in the Square Mile. This was clearly reflected in turnover levels as traders resigned themselves to another day of subdued trading. The FTSE 100 index was just 2.61 down at 4075.17, despite the setback for Wall Street overnight.

But dealers say the absence of any real demand paints a false picture of what is going on in the marketplace.

Record full-year profits from BP were offset by the fourth-quarter loss u the first in seven years u due to the falling oil price. The shares responded with a loss of 83/4p at 476p.

In India, Cairn Energy, down 13p at 1741p, has received permission from the state government of Rajasthan to build an oil pipeline. …

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