HSBC Re-Enters Interbank Loans Market

Wed, 08 Oct 2008

HSBC has aggressively moved back into the interbank market, lending to rivals, following the Government's decision to bail-out Britain’s banks .

The lender confirmed it had re-entered the interbank market yesterday by lending "£2 billion to other banks on three and six month terms".

The move follows yesterday’s announcement by Prime Minister Gordon Brown and Chancellor Alistair Darling of a £250 billion banking bail-out plan.

In a press conference, Brown said the decision to offer up to £50 billion of capital to eight major banks and give them access to a £200 billion liquidity scheme was the "best way to provide long-term security" and allow banks to resume normal lending .

Following the announcement, a spokesman for HSBC made it clear the bank does not expect to make use of the UK Government's offer to recapitalise banks .

"The Treasury lists HSBC Bank Plc, which is the right entity, but actually makes up only 25 per cent of the group," the spokesman said.

"We have agreed with Treasury that the UK bank's Tier One capital will be raised to the level specified, but we can do that from our own resources. HSBC has no current plans to utilise the recapitalisation scheme."

HBOS said that it welcomed today's recapitalisation proposals, which it added would allow it to regain full access to wholesale funding markets.

Barclays said that it was studying the proposals and that it was likely to take part in the scheme.
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