Trading in HSBC shares suspended in Hong Kong

[TwixVoy]

Source: MarketWatch

http://www.marketwatch.com/news/story/Trading-HSBC-shares-suspended-Hong/story.aspx?guid=%7BE11E544D%2DD871%2D4D17%2DA992%2D4F60B1065ECB%7D

"HONG KONG (MarketWatch) -- Trading in shares of HSBC Holdings was suspended in Hong Kong Monday at the banking giant's request, pending "the announcement of a corporate action."

Read more: http://www.marketwatch.com/news/story/Trading-HSBC-shares-suspended-Hong/story.aspx?guid=%7BE11E544D%2DD871%2D4D17%2DA992%2D4F60B1065ECB%7D

---

Looks like another one is in major trouble... expect the US markets to tank on this tomorrow.

[pinniped]

1. These guys are one of the big names in predatory lending.

F-em.

[TwixVoy]

2. Very true

unfortunately they are also one of the worlds biggest banks and fall in to the "too big to fall" group.

[Prometheus Bound]

7. I wonder who would save them though.

They're a UK bank, but too big for the UK to save. They basically had a license to print money in HK before they expanded and threw away their obscene profits on the US housing market. They're the fifth largest holder of derivatives. Gulp. I hope the confidence they show in public is based on something real.

[Earth Bound Misfit]

8. Gulp is right

http://nbcharts.blogspot.com/2009/01/derivative-exposure-revisited.html

Banks around the World have loaded up their Balance Sheets with Trillions of Dollars of Derivatives. The Derivatives...were designed to protect the owners of the Bonds in case of these bonds defaulted.

The Premiums charged on these Derivatives (Insurance Policies) were artificially low and the banks who wrote them wrote far too many, in an effort to increase their revenue and earnings (Congress was urged to allow this by none other that Hank Paulson when he ran Goldman Sachs and testified before Congress). These banks used massive leverage and Enron-like accounting tricks (off balance sheet entities like SIVs to hide losses) to allow themselves the ability to sell many times more insurance than they could afford to sell and still remain solvent, if the economy ever went into recession. So when the economy did slow and those Bonds did default, the Banks who wrote the Derivatives did not have enough capital to pay off all the insurance claims.

snip

Now those banks are again out of money and have gone bank to Washington to beg (and receive) the second half of the TARP. They were always insolvent, but they can no longer lie on their Quarterly Filings with the Government and now must be nationalized.

This has always been a slow motion nationalization of the banking system. The goal was to keep up investor “Confidence”, so that people didn’t panic and pull all of their funds out of insolvent banks and the debt of insolvent countries (US Treasuries) and insolvent states (California Municipal Bonds).

What they did was lie to the public to keep them buying stock. This allowed the over-leveraged Institutions in the know (Hedge Funds and Pensions Plans) to sell their over-priced crap to an unsuspecting Public. The Regulators have been on the side of the crooks and regulating the propaganda, because those in government believe that if they don’t prop up asset prices, then there will be riots in the streets. I’m not making this stuff up.

If you look at the list, then you can see that the banks to be nationalized are JP Morgan, Bank of America, Citigroup and Wells Fargo (Cramer’s “Fab Four” as I recall –propaganda). You will also notice on the list that Citigroup shows assets of $1.228 trillion, yet when they split up this week, they put $800 billion into one section and $1.1 trillion into the other.

That is a heck of a lot more in assets than they declared they held on their last Quarterly Filing (1.2 trillion versus 1.9 trillion). The excess assets were there all along, but they were held “off balance sheet”, so Citi was not forced to declare that they in fact owned them.

More at link

[Prometheus Bound]

11. Good information. They seem to be way beyond normal bankrupt condition.

Do you think anyone will buy the 18 billion HSBC is trying to raise?

[Earth Bound Misfit]

18. Good question.

This article addresses that concern nicely:

http://www.ft.com/cms/s/0/62f5a7e6-0700-11de-9294-000077b07658.html?nclick_check=1

HSBC plunges after £12.5bn rights issue

Shares in HSBC tumbled on Monday after the bank launched a deeply discounted £12.5bn rights issue and outlined plans to close its struggling US consumer lending business.

The rights issue, the largest ever underwritten by the private sector, was offered to existing shareholders on five-for-12 basis priced at 254p, a discount of nearly 50 per cent compared with Friday’s closing price of 491¼p.

The shares, which had been suspended in Hong Kong ahead of the announcement, fell more than 20 per cent on Monday to 392p in London trading.

The news came as HSBC confirmed it was closing its US consumer finance business and shutting nearly 800 branches. It will take a $265m restructuring charge against the closure, but this would lead to $700m of annual savings. The move would result in the loss of 6,100 jobs.

Stephen Green, chairman of HSBC, expressed regret for buying the business in 2003 for $14bn.

snip

The bank’s results for 2008 showed a pre-tax profit of $19.9bn, down 18 per cent on 2007, before a goodwill write-off of $10.6bn relating to the US business, leaving a pre-tax profit of $9.3bn. The bank warned of another difficult year ahead.

The bank said it made a profit in each of its regions except for North America, where it recorded a loss of $15.5bn including the goodwill write-down.

There were strong performances from the bank’s emerging markets operations. Pre-tax profits from mainland China rose 25 per cent to $1.6bn while those from India were up 26 per cent to $555m. Profits from the Middle East rose 34 per cent to $1.7bn.

snip

He said in soundings with shareholders, there had been a positive reaction to the structure of the rights issue, a traditional “plain vanilla” deal offering full pre-emption rights to shareholders which is being fully underwritten by Goldman Sachs International, JP Morgan and others.

HSBC also promised to continue to pay cash dividends, unlike many of its competitors, although at a lower rate. It set the final quarterly dividend for 2008 at 10 cents a share, to give a total for the year of 64 cents, down 29 per cent in dollar terms, or 15 per cent in sterling.

More ar link

BTW, Welcome to DU :hi:

[Idealism]

3. Markets across the globe will tank due to Merkel and the EU's indifference to Eastern Europe n/t

[Zynx]

4. This may well be the end of the EU.

The loss of fiscal and monetary autonomy in this crisis is a severe constraint and will lead to very severe public backlash.

[Idealism]

5. The EU has always been a farce

It was an excuse for France and Germany to dominate the agenda of the continent, while weakening Russian hegemony in the region. They refused Eastern Europe the right to the "euro" being adopted over fears of their weak economies. It was always an exclusive club; "open market" was such a ruse.

[jordi_fanclub]

16. Yeah, yeah... we remember the "Old Europe"/"New Europe" right-wing saga

The "excuse" you refer is probably related with this right-wing/free-markets-libertarians "experience":

March 2 (Bloomberg) -- Eastern European governments that ran political risks to support former President George W. Bush’s security policies are now concerned that his successor, Barack Obama, will backtrack on those regional commitments.

Leaders in the Czech Republic, Poland and other former communist nations face a backlash at home over their support of Bush-era initiatives, including the proposed U.S. missile- defense system and troop participation in Iraq and Afghanistan.
...
Eastern Europe’s angst over U.S. priorities stands in stark contrast to just a few years ago, when Bush’s Defense Secretary Donald Rumsfeld lauded the former communist states of what he called “New Europe” for their willingness to commit troops to the U.S.-led war in Iraq in 2003, while “Old Europe” nations including Germany and France refused.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aTafsPsPnkdw&refer=home

[Idealism]

19. The Hungarian minister is right, it is a new Iron Curtain waiting to happen.

[tama]

20. The founding fathers of EU

after the horrors of war, had some not so very daft ideas - like trying to avoid the next big war. What has ruined and is ruining EU is the neoliberal dogma - predatory capitalism - and antidemocratic elitism.

Central and Eastern Europe have not been refused the "right" to join Eurozone, on the contrary they are obligated to do so - ie. to follow "sound" fiscal principles dictated by Bruxxelles in order to fill the criteria to join Eurozone.

[Idealism]

25. The EU was founded to try to combat American dominance

The lofty ideals written in their charter were secondary. They wanted a unified dollar to combat their weaker currencies, and to be have an influence at the WTO. It always has been and always will be an alliance to combat American hegemony and improve the collective country's bargaining power.

[RoyGBiv]

6. More on this ...

... not the suspension, per se, but some of what's behind it.

HSBC plans £12bn-plus share issue

By Peter Thal Larsen, Neil Hume and Kate Burgess

Published: February 27 2009 23:30 | Last updated: February 27 2009 23:30

HSBC is planning to raise more than £12bn through a share issue as the banking group seeks to shore up its capital buffers in order to cope with the global economic downturn.

The bank was on Friday night finalising the issue, which is likely to be unveiled alongside its full-year 2008 results on Monday. However, people involved in the discussions warned that details such as the exact price of the offering had not been set and it could still be postponed. HSBC is also expected to announce a cut in its dividend.

At more than £12bn, the offering – which is being underwritten by Goldman Sachs and JPMorgan Cazenove – is expected to set a new UK record for a rights issue funded by private investors, eclipsing Royal Bank of Scotland’s £12bn offering last April. HSBC, which declined to comment, is the latest in a long line of global banks to seek to strengthen its capital reserves by issuing shares. However, the offering is expected to underscore HSBC’s relative strength because it is raising fresh capital from its existing shareholders, rather than the government.

The bank has weathered the credit crisis in better shape than most rivals because of profitable operations in Europe and the Middle East and its history of maintaining a larger capital base than rivals. At the end of September, the bank’s tier one ratio – a measure of capital strength – stood at 8.9 per cent, at the upper end of its stated range of 7.5 per cent to 9 per cent.

http://www.ft.com/cms/s/0/c1d45df8-0510-11de-8166-000077b07658.html?nclick_check=1

[dipsydoodle]

9. Isn't this action

more likely, due to the pricing of the rights issue , to prevent manipulation by the financial cowboys ? :shrug:

[muriel_volestrangler]

10. Yeah; trading in London went ahead as normal - though the price did drop 10% or so

but you're right, this would just have been so that the official news of the rights issue came out when there wasn't active trading on a stock market somewhere in the world.

[dipsydoodle]

12. According to last nights late TV news

HSBC's reserves dwarf their exposure with regard to writing off even all delinquent assets.

Do you know - are they literally infact a UK bank or a worldwide bank with UK headquarters ? I thought it was the latter. Back in the '80 when I sold a photocopiers one of my accounts was Norman Fosters in Portland Street W1 - the architects who designed the Honk & Shanghai's then headquarters in Hong Kong. It wasn't a UK bank then and nothing much changed until they bought the Midland.

[muriel_volestrangler]

15. "worldwide bank with UK headquarters" is most accurate, I think

They claim 100 million customers worldwide, so over half must be outside the UK.

Share price now down 19% - they're not having a nice day.

[Tab]

13. I have an HSBC account

and I have no love for them.

I'm not shedding any tears on their behalf.

[a la izquierda]

14. Me too, for use in Mexico.

Damn.

[FarLeftRage]

17. This suxxx!!!!

hsbc is my elderly parents' hometown bank...

I hope their account remains safe... :(

[pinniped]

21. These assholes are closing most of their HFC loan/ripoff centers.

Guess I won't be getting anymore $5,000.00 HFC loan checks in the mail that require $10,000.00 to be paid back in 60 months.

You could pay these HFC fucks off early, but $10,000.00 is the sum regardless.

[sarcasmo]

22. I gave this a Rec, because I think this is the start of the credit card house of Domino's.

[Generator]

23. Domino's has their own credit card!?

My God, people need to pay cash for the pizza.

[InkAddict]

24. Hmm...Stouffer's French Bread Pizza

4 for $8 at my grocery - too bad my freezer's so small.