HSBC set for shares issue as profits slide

HSBC on Monday announced a 62 percent slide in annual pre-tax profits to $9.3 billion, delivering a further blow for the beleaguered UK banking industry.

The bank also confirmed it would seek to raise $17.7 billion through a shares issue to bolster its capital strength — a record sum for a British company. Highlighting $15.5 billion losses in its U.S. businesses, HSBC also said it would scale back its operations in the U.S., shutting down its Beneficial and HFC brands — a measure which would see the company shed more than 6,000 jobs. In early trading Monday, HSBC shares were down around 10 percent on London’s FTSE. In a statement, HSBC Group Chairman Stephen Green said the crisis in the global economy had put the financial system under “unprecedented stress” and admitted that the banking industry had done many things wrong. “It is important to remember that many ordinary bankers have always sought to provide good service to their customers; but we must also recognize that there have been too many who have profoundly damaged the industry’s reputation,” Green said. Unlike other British banks, HSBC has not received any financial assistance from the UK government. But Green said it was necessary for the bank to raise its capital base to meet higher regulatory requirements and changing market sentiment. The shares issue will see 5.1 billion shares offered at 254 pence each — a 48 percent discount on Friday’s closing price. Green also reiterated that no HSBC executive directors would receive bonuses in either cash or performance share awards and said the bank “intended to play our part in rebuilding public trust in our industry.” “It is clear that the banking industry got it wrong in the go-go years,” he said. “We will play our part in helping the industry respond appropriately to the new realities.”