Published October 9, 2008

THE BIG BRITISH BAILOUT
HSBC and Stanchart don't need the cash

Both banks welcome scheme but say they have enough capital of their own

By SIOW LI SEN
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(SINGAPORE) HSBC and Standard Chartered Bank - the two foreign banks most popular with Singaporeans - are well funded and do not need to access the emergency capital provided by the British government to the UK banking sector.

A statement from HSBC yesterday said it welcomed London's proposals to provide liquidity and inject capital into the British banking system, which are important and necessary steps in restoring confidence to the sector.

'Consistent with the objectives of the UK scheme announced today, HSBC will ensure that our principal UK subsidiary, HSBC Bank Plc, continues to be appropriately capitalised, funded from the group's internal resources.

'HSBC therefore has no current plans to utilise the UK recapitalisation initiative,' the bank said.

HSBC and Standard Chartered are among the eight largest UK banks and building societies offered £50 billion (S$128 billion) for recapitalisation by the government as part of a plan to inject liquidity into the banking system.

The eight are Abbey National Plc, Barclays Plc, HBOS Plc, HSBC Bank Plc, Lloyds TSB Bank Plc, Nationwide Building Society, Royal Bank of Scotland and Standard Chartered Bank.



'This is a big event for the industry, more of a non-issue for us. We really don't need the capital, we are very strongly capitalised and highly liquid,' said Standard Chartered spokesman Arjit De yesterday.

'We will support the effort, being part of the system, but are likely to be limited and non-material users of the facility. We don't intend to issue capital under the recapitalisation scheme,' he added.

Both HSBC and Standard Chartered are so well funded that they are net lenders to the interbank system.

HSBC said it provided significant amounts of liquidity to the London Sterling interbank market on Tuesday, lending around £2 billion of three-month and six-month money to other banks.

The bank said: 'HSBC expects to be very active in the London interbank market again today (Wednesday). HSBC believes its actions will contribute to easing the strain in UK money markets, where the availability of three-month and six-month interbank loans has been very tight in recent weeks.'

And Mr De said: 'Standard Chartered is not dependent on wholesale funding markets.'