Big British Banks Have $120 billion in subprime exposure

Barclays faced fresh embarrassment yesterday over its £314 million emergency loan from the Bank of England, when HSBC, its rival, furiously denied that an error by its bankers had forced Barclays into the red. Meanwhile, it emerged that Britain’s biggest high street banks have more than $120 billion (£60 billion) worth of exposure to the troubled asset-backed commercial paper market.

The banks have suffered a torrid few days, in which HBOS bailed out a $35 billion in-house fund, Barclays became the first bank to call on the Bank of England’s lending facility since the credit crunch and Northern Rock faced speculation that it was about to issue a second profits warning. Sources at Barclays had blamed its overnight borrowing from the Bank of England on HSBC, saying that the bigger bank had failed to provide a loan, as promised. Barclays would be eligible for compensation from HSBC, the sources said.

HSBC denies Barclay’s claims and allegations. As for $120 billion in subprime exposure Household – HSBC Watch has not released their risk exposure ratings, but the group did say HSBC has the highest risk score.