HSBC Falls Below HK$40 for First Time Since 1996
March 9 (Bloomberg) -- HSBC Holdings Plc, the bank that’s raising 12.5 billion pounds ($17.6 billion) in a rights offer, fell below HK$40 in Hong Kong trading for the first time in more than 12 years on concern about bad loans at its U.S. unit.
The shares fell 11 percent to HK$38.85 at 12:30 p.m., the lowest since July 1996. HSBC, Europe’s largest bank, has lost 32 percent since announcing on March 2 that it will sell new shares to existing stockholders at the equivalent of HK$28 apiece.
HSBC Chairman Stephen Green last week said the 2003 purchase of Illinois-based Household International, which led to billions of dollars of losses as the U.S. housing market collapsed, was a mistake. CLSA Asia-Pacific Markets analyst Daniel Tabbush, who in December correctly predicted HSBC would have to raise money, cut his target price for the stock by 32 percent to HK$28, citing the threat of swelling bad debts.
“People are not so animated on the outlook given their ongoing exposure to the U.S.” lending business, said Warren Blight, a Hong Kong-based analyst at Fox-Pitt Kelton Asia Ltd.
The London-based bank will stop making new loans at its U.S. unit, called HSBC Finance Corp., after reporting a 70 percent drop in full-year profit last week. Green said that with hindsight, he regretted the purchase of Household, which added almost 50 million U.S. clients, many with spotty credit histories.
Even as it was forced to tap investors for funds, HSBC has avoided the severity of losses that forced rivals Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc into government bailouts.
March 9 (Bloomberg) -- HSBC Holdings Plc, the bank that’s raising 12.5 billion pounds ($17.6 billion) in a rights offer, fell below HK$40 in Hong Kong trading for the first time in more than 12 years on concern about bad loans at its U.S. unit.
The shares fell 11 percent to HK$38.85 at 12:30 p.m., the lowest since July 1996. HSBC, Europe’s largest bank, has lost 32 percent since announcing on March 2 that it will sell new shares to existing stockholders at the equivalent of HK$28 apiece.
HSBC Chairman Stephen Green last week said the 2003 purchase of Illinois-based Household International, which led to billions of dollars of losses as the U.S. housing market collapsed, was a mistake. CLSA Asia-Pacific Markets analyst Daniel Tabbush, who in December correctly predicted HSBC would have to raise money, cut his target price for the stock by 32 percent to HK$28, citing the threat of swelling bad debts.
“People are not so animated on the outlook given their ongoing exposure to the U.S.” lending business, said Warren Blight, a Hong Kong-based analyst at Fox-Pitt Kelton Asia Ltd.
The London-based bank will stop making new loans at its U.S. unit, called HSBC Finance Corp., after reporting a 70 percent drop in full-year profit last week. Green said that with hindsight, he regretted the purchase of Household, which added almost 50 million U.S. clients, many with spotty credit histories.
Even as it was forced to tap investors for funds, HSBC has avoided the severity of losses that forced rivals Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc into government bailouts.
