HSBC makes £1bn credit available

HSBC announced worldwide job cuts earlier this year

Banking group HSBC says it is making £1bn ($1.4bn) in extra credit available to support small British businesses.

The government has been demanding for weeks that banks resume lending to firms struggling as credit dries up.

The bank said the money would help "fundamentally sound businesses" with cash-flow problems to "weather short-term shocks caused by the downturn".

Meanwhile, the bank said on Monday that it would increase its funding in the mortgage market by a fifth.

HSBC said it had lent £7.8bn for UK mortgages in 2007 and £12.8bn this year. The bank said this figure would rise to £15bn in 2009.

"By some estimates, net mortgage lending in the UK will fall next year, but HSBC has no intention of closing its doors to customers, nor will we compromise our reputation for responsible lending," said Paul Thurston, HSBC's UK managing director.

The pledge comes after former banker Sir James Crosby warned in a report to the government that net new mortgage lending in the UK could fall below zero next year.

'Economies' lifeblood'

HSBC, which did not take any of the government's bail-out funding, said on Sunday that the money for businesses was part of a £3.3bn global working capital fund for small and medium-sized enterprises (SMEs).

It said lending would be decided on a "case-by-case basis" using HSBC's normal lending criteria.

Alan Keir, co-head of HSBC's commercial banking, said:"This is new money, new money to support struggling small businesses that bank with us."

"We've heard that their critical need is for working capital, so we're responding to that," he said.

Michael Geoghegan, HSBC's group chief executive, said: "This is a difficult time for business in many economies. Customers are rightly looking to see how banks can help.

"SMEs are the lifeblood of most economies and it is their success that will create economic growth."

Business Secretary Peter Mandelson said: "We welcome this support providing additional funds for SMEs, and would also urge all banks to maintain charges and rates alongside offering good communications with their small business customers."

(Source : news.bbc.co.uk)

HSBC aims to lend more mortgages

The bank aims to scoop up a large slice of new mortgage lending in 2009

The bank HSBC is aiming to grab a much larger share of the UK mortgage market in 2009.

It has set aside £15bn ($22.3bn) to lend to home owners next year, roughly double the amount it lent in 2007.

New mortgage lending by all banks is predicted to come to a halt next year because the credit crunch means most do not have fresh funds to lend.

"We will be surprised if we do not have a bigger slice of a smaller market," said an HSBC spokesman.

Falling prices

HSBC is one of the world's largest international banks and has not been as badly affected by the financial crisis as many of its rivals in the UK.

As such, the spokesman explained, it would be able to draw on its own internal resources to finance greater mortgage lending, as it does not have to rely on wholesale financial markets, nor UK domestic savers, to provide it with the necessary funds.

"We believe we are the only UK bank that can do this," he said.

If the bank lends all of the £15bn at an average of £100,000 per borrower, then that would amount to 150,000 home loans.


It appears house prices will fall again next year
HSBC spokesman

But HSBC said it was not trying to stimulate the property market by bringing in first-time buyers who would otherwise continue to be frozen out.

Much of its lending is likely to be to existing borrowers who are either moving house, or simply staying put but moving their mortgage deals.

And it will continue to charge much higher fees and interest rates for borrowers, such as first-time borrowers, who put down smaller deposits.

"It appears house prices will fall again next year," said the spokesman.

"But the quality of our mortgage book will not fall," he stressed.

Small businesses

On Sunday HSBC said it would also make £1bn in extra credit available to support small British businesses.

The government has been demanding for weeks that banks resume lending to firms struggling as credit dries up.

The bank said the money would help "fundamentally sound businesses" with cash-flow problems to "weather short-term shocks caused by the downturn".

HSBC, which did not take any of the government's recent bail-out funding, said that the money for businesses was part of a £3.3bn global working capital fund for small and medium-sized enterprises (SMEs).

It said lending would be decided on a "case-by-case basis" using HSBC's normal lending criteria.

Alan Keir, co-head of HSBC's commercial banking, said: "This is new money, new money to support struggling small businesses that bank with us."

"We've heard that their critical need is for working capital, so we're responding to that," he said.

(Source : ews.bbc.co.uk)