Bloomberg News

U.K. Rules Cut HSBC Value by 17%, CEO Tells Sunday Telegraph

March 04, 2012

HSBC Holdings Plc (HSBA) Chief Executive Officer Stuart Gulliver said that the bank is “permanently undervalued” by as much as $28 billion due to U.K. financial regulations introduced after the debt crisis, the Sunday Telegraph said.

The U.K. banking levy and the Treasury’s demand that banks set aside capital to absorb a loss of as much as 20 percent of their balance sheets will cost HSBC $700 million and $2.1 billion, respectively, in 2012, the newspaper quoted the CEO as saying. At a price-earnings ratio of 10, that would shave about 17 percent off the bank’s market capitalization, Gulliver told the newspaper.

Gulliver has asked the Treasury to make the banking levy a windfall tax, which would make it tax-deductible and protect HSBC’s dividend, the Sunday Telegraph reported.

To contact the reporter on this story: Stephen Morris in London at smorris39@bloomberg.net.

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net.


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