Where can HSBC get the capital it needs? Even when United States regulators are asleep it will be hard to pull $14 billion from questionable late payments, over-limit fees, and annual fees. Even as the United States TARP program loses track of where the money was supposed to go it is hard to pack enough insurance to raise $14 billion.
With a slowdown in Asia, and the Japanese discount rate down to 1/10th of one percent one must rule that out as a viable option. Malaysia or the Arab Gulf States might be an option, but if my figures are correct HSBC will show another loss in the United States. As any borrower knows it is better to look for cash before bad news hits the fan.
HSBC continued its current slide, down a further three percent by close of business Friday. We will see what the weekend brings. If HSBC needs $14 billion it would be prudent to make a move before Household International drags the bank down even more.
In the United States there is little HSBC can do to increase revenue, while consumer advocates plan to stop HSBC from crediting customer payments unfairly as late payments (see more) saying enough is enough.
Eleven banks were downgraded today by Standard and Poor’s Ratings Services. They are Bank of America (BAC), Barclays, Citigroup (C), Credit Suisse Group (CS), Deutsche Bank (DB), J.P. Morgan Chase & Co. (JPM), Morgan Stanley (MS), Royal Bank of Scotland, UBS (UBS), Wells Fargo (WFC) and Goldman Sachs (GS). HSBC’s (HSBA) outlook has been changed to negative, meaning a downgrade is possible.