HSBC Facing a 'Hit' of over £6.3bn as a Result of Unsecured Commercial Property Loans in China: Report
IANS 29 November 2023
HSBC is facing a 'hit' of more than £6.3bn (billion) as a result of unsecured commercial property loans in China, a UK-based tax consultant has warned, a media report said.
Payments and banking consultant Bob Lyddon branded the situation as a ‘disaster’, and warned of a 'financial contagion' risk which could have a knock-on effect on Britain’s economy, Express UK reported.
Earlier this month, HSBC had confirmed it was setting aside £910mn (million) to cover expected loan losses, including £412mn related to the commercial real-estate sector in China—but Lyddon said the actual picture was much worse, Express UK reported.
The founder of Lyddon Consulting Services outlined his concerns in an analysis specifically written for Express UK, urging the Bank not to underestimate the seriousness of the situation.
He said: "HSBC's stake in its Chinese bank - Hang Seng - looks overvalued by £3.3 billion given the benchmark set by Standard Chartered. Forty-two per cent of HSBC's commercial property loans into China are either sub-standard or credit-impaired: £4.6 billion out of £11 billion. That's a disaster.
"The equivalent figures just for Hong Kong are 63 per cent, and £3.8 billion out of £6 billion. That's a catastrophe," Express UK reported.
Even worse, £3bn of this £3.8bn was not backed by real-estate security, Mr Lyddon stressed.
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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