NEWS | Wednesday, 15 October 2008

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World recession will leave mark on Malta, says HSBC chief

HSBC Malta chief executive Alan Richards yesterday said that although the banking system in Malta was in good shape, “the consequences of a pronounced world economic recession is bound to leave its mark on the local economy.”
While some form of world recession was inevitable, Richards said it was encouraging to see governments worldwide working on a consolidated plan of action to support the banking system, and to facilitate the process of rebuilding trust between banks and to restore confidence back into the market.
He said there was light at the end of the tunnel on the credit crisis but the consequences of the credit crunch are expected to last until 2010 or 2011.
“The authorities are in constant touch with us and the fact that Malta is in such relatively good shape given the global financial turmoil of recent weeks is testimony to the effective policies of government, the Central Bank and the MFSA.
“In hindsight, Malta’s membership of the European Union and its conversion to the Euro could not have come at a better time. Personally I think it has significantly reduced the risks Malta would have otherwise faced,” Richards said.
Over the past days, governments worldwide announced bank recapitalisation programmes to get the banking system back on its feet, but HSBC, like Standard Chartered, is one of the few banks which remain in the premier league of banking.
Last week, HSBC Holdings plc announced a £750 million increase to its capital base from its own resources to further strengthen the already-healthy capital position of its UK subsidiary HSBC Bank plc.
The £750 million equity injection represents just one per cent of the total shareholders’ equity of the HSBC Group (as at June 30, 2008), a spokesman said.
Alan Richards, noted that, although the initiative has no direct impact on HSBC’s operations in Malta, the move demonstrates that, in these challenging times, HSBC’s enduring commitment to financial strength worldwide remains “hugely powerful”.
“In recent years the HSBC Group has been seen in some quarters as overly cautious and conservative. The constant priority placed on capital, liquidity and prudent risk management over many years explains the financial strength of the Group which has been so self evident in recent weeks,” Richards said,
As the world’s largest bank by market value, and with one of the highest capital ratios in the world, HSBC is outperforming its peers particularly in the present turmoil, the bank said in a statement.
HSBC has also been active in the British interbank market in recent days, coming to the rescue of other banks struggling with the ongoing financial crisis. In its efforts to continue to support the stabilisation of the financial markets’ operation, over the last few days HSBC also provided significant amounts of liquidity to the London interbank market, lending about £4 billion to other banks.
The international press has welcomed HSBC’s financial strength with The Independent newspaper in Britain going as far to say that HSBC “is among the safest places to keep savings.”

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