The camera never sleeps comfortably... when banks tower on the horizon
A happy coincidence of east London images.
Bankers' Heaven or Hell: The offices of Barclay's, Credit Suisse, & HSBC among others (including the defunct Lehman Bros, just to the right of this photo) at Canary Wharf on the Isle of Dogs..... and the banner for a sleep-easy bed & mattress warehouse... with some of that mortgaged negative equity sandwiched in-between.
(When will they ever learn? HSBC is one of the few international banks still standing tall-ish, despite buying a dodgy American enterprise called Household - HFC - through which is enlarged its toehold in the USA and inherited both an outlandishly overpaid US director, William Aldinger, now dropped but living off the proceeds, who, at a guaranteed £37.5m over 3 years from 2003 - plus free US-priced health & dental care for life, received dramatically more than his new bosses in the combined bank...... but also its household finance, credit card and sub-prime mortgage exposure in the USA. HSBC survives largely intact because so much more of its business was in Asia & emerging markets and more conservatively-managed credit in Europe [mainly through the former Midland Bank operation in the UK, a rather wiser purchase, it turned out, though Midland was only affordable because its 1970s management had bought another dodgy gambling US-house-mortgage-lending-to dead-&-bankrupt-people bank, Crocker, and suffered long after writing off that purchse too].... and courtesy of a massive £12.5billion rights issue to its existing shareholders who have been asked to fork out a record number of billions - the largest ever UK rights issue - to support the HSBC balance sheet.
The same - on what then seemed a massive scale - happened to RBS shareholders only last year and look what befell them: the UK government now owns most of the Royal Bank of Scotland and its ordinary shareholders have been diluted and abluted! But, unlike all but Santander & JP Morgan Chase, HSBC's position is protected by its profitability - it has even declared a dividend, albeit reduced and its 2008 profits fell from $24m to $9m - and by the fact that its deposit base exceeds its loans, something that was once quite an important principle of sound banking everywhere! It now regrets its Household purchase and agrees, it seems, with its biggest rebellious shareholders..... and yet it probably won't walk away from the Household liabilities because it would ruin its reputation. Interestingly, though it has lent Household even more than it's raising through the rights issue, it has not actually guaranteed the Household liabilities; so it could renege on them if everything got really scary. Something else to keep lawyers in business!) It seems that the rights issue, which closed on 3 April, was a success with a 97% take-up of shares at a 44% discount (but then the RBS issue last year had a 95% take-up which benefitted shareholders onl;y if they sold their shares immediately!). HSBC stock-holders, like the leaders gathered nearby for the G20 summit, must hope that its share-price and profitability is sustained - because if HSBC goes down...... ouch!! And let's hope it holds up because, following the world's turbulence, HSBC strategy is, it claims, now aligned with 3 trends which are shaping the global economy:
1. Emerging markets are growing faster than developed countries
2. World trade is expanding faster than GDP
3. Longevity is increasing virtually everywhere
What's that about growth & expansion?!)
#364 on Explore, Saturday, April 4, 2009
The camera never sleeps comfortably... when banks tower on the horizon
A happy coincidence of east London images.
Bankers' Heaven or Hell: The offices of Barclay's, Credit Suisse, & HSBC among others (including the defunct Lehman Bros, just to the right of this photo) at Canary Wharf on the Isle of Dogs..... and the banner for a sleep-easy bed & mattress warehouse... with some of that mortgaged negative equity sandwiched in-between.
(When will they ever learn? HSBC is one of the few international banks still standing tall-ish, despite buying a dodgy American enterprise called Household - HFC - through which is enlarged its toehold in the USA and inherited both an outlandishly overpaid US director, William Aldinger, now dropped but living off the proceeds, who, at a guaranteed £37.5m over 3 years from 2003 - plus free US-priced health & dental care for life, received dramatically more than his new bosses in the combined bank...... but also its household finance, credit card and sub-prime mortgage exposure in the USA. HSBC survives largely intact because so much more of its business was in Asia & emerging markets and more conservatively-managed credit in Europe [mainly through the former Midland Bank operation in the UK, a rather wiser purchase, it turned out, though Midland was only affordable because its 1970s management had bought another dodgy gambling US-house-mortgage-lending-to dead-&-bankrupt-people bank, Crocker, and suffered long after writing off that purchse too].... and courtesy of a massive £12.5billion rights issue to its existing shareholders who have been asked to fork out a record number of billions - the largest ever UK rights issue - to support the HSBC balance sheet.
The same - on what then seemed a massive scale - happened to RBS shareholders only last year and look what befell them: the UK government now owns most of the Royal Bank of Scotland and its ordinary shareholders have been diluted and abluted! But, unlike all but Santander & JP Morgan Chase, HSBC's position is protected by its profitability - it has even declared a dividend, albeit reduced and its 2008 profits fell from $24m to $9m - and by the fact that its deposit base exceeds its loans, something that was once quite an important principle of sound banking everywhere! It now regrets its Household purchase and agrees, it seems, with its biggest rebellious shareholders..... and yet it probably won't walk away from the Household liabilities because it would ruin its reputation. Interestingly, though it has lent Household even more than it's raising through the rights issue, it has not actually guaranteed the Household liabilities; so it could renege on them if everything got really scary. Something else to keep lawyers in business!) It seems that the rights issue, which closed on 3 April, was a success with a 97% take-up of shares at a 44% discount (but then the RBS issue last year had a 95% take-up which benefitted shareholders onl;y if they sold their shares immediately!). HSBC stock-holders, like the leaders gathered nearby for the G20 summit, must hope that its share-price and profitability is sustained - because if HSBC goes down...... ouch!! And let's hope it holds up because, following the world's turbulence, HSBC strategy is, it claims, now aligned with 3 trends which are shaping the global economy:
1. Emerging markets are growing faster than developed countries
2. World trade is expanding faster than GDP
3. Longevity is increasing virtually everywhere
What's that about growth & expansion?!)
#364 on Explore, Saturday, April 4, 2009