HSBC Holdings (LON:HSBA) is in talks with the Bank of England (BOE) over a deal which could release more than £5 billion trapped in the FTSE 100 group’s Chinese business, The Sunday Times has revealed. The news comes ahead of the blue-chip bank’s third-quarter results a week from today.
HSBC’s share price lost ground on Friday, shedding 0.48 percent to close at 624.50p, underperforming the blue-chip FTSE 100 index which added 9.69 points to end the session 0.14 percent higher at 6,996.26. The group’s shares have gained more than 20 percent over the past year, as compared with a near 10-percent rise in the Footsie.
The Sunday Times reported yesterday that HSBC was in talks with the BOE over how it might free up £5 billion currently locked up in its Chinese business. The Asia-focused lender could use the money for activities such as funding new loans. The FTSE 100 group has reportedly proposed to regulators that it should be allowed to reduce the capital buffer it is currently holding against its 19 percent stake in China’s Bank of Communications, claiming the Bank is being too pessimistic in its risk assessments.
City A.M. noted in its coverage of the news that although the talks were understood to have been ongoing for some time, the Prudential Regulation Authority had published a paper on durable links earlier this month, examining how much capital a bank should be on the hook for if it holds a stake in another lender of less than 20 percent.
In analyst ratings, as of October 28, the consensus forecast amongst 24 polled investment analysts covering HSBC for the Financial Times has it that investors should hold their position in the company.