Best business bank account dismissive of government criticism

HSBC chairman Michael Geoghegan recently dismissed the concerns of the recently formed governmental banking commission headed by Sir John Vickers, claiming that the bank was large enough to cope with any difficulties it may encounter.

Geoghegan’s implication that HSBC, viewed by many as the best business bank acount in the UK, should be left to its own devices and not subject to a forced reduction in size by the government due to public safety concerns.

Claiming that HSBC is blameless, Douglas Flint, finance director for the banking group, pointed to their 70 per cent acceptance rate for personal and business loans in the UK.  Flint also commented that determining a target for loan acceptance would prove difficult, and that the bank itself has no control over the number of application submitted, which has declined by 20 per cent, or that nearly half of HSBC’s facilities approved for overdrafts are going unused currently.

There may be some merit to the banking giant’s arguments; HSBC did indeed prove large enough to cope with the ultimately ill-starred decision to engage in the sub-prime loan market in the US.  The bank’s otherwise spotless record of lending in a conservative manner is tarnished by its acquisition of Household several years ago, but HSBC was ultimately unbowed by the decision.  The bank can now boast incredibly high capital ratios, mostly due to a £12bn shareholder offering in 2008.

Geoghegan’s boast that his bank is large enough to weather the economy is a double-edged sword, however.  Due to the redirection of capital funds into the Asian markets, which is earning the bank a 25 per cent return on their investments, HSBC has a diminished incentive to broaden its lending practises in the UK; it seems that in addition to being large enough to survive, the bank is also large enough to choose where it will concentrate its efforts.  Unfortunately for UK business owners, indications are that Asia will be the bank’s main focus.

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