Chronicles Of Depression 2.0: #097

HSBC write-downs 'should be $50bn'

Knight Vinke, the activist shareholder laying siege to HSBC, today accused the bank of massively understating its probable losses on US subprime debt, suggesting it should have written off another $25 billion or more to be as prudent as its biggest rivals.

The shareholder activist, which has made renewed attacks on HSBC's strategy since last year, accused the bank of failing to apply the same conservative accounting standards to measuring sub-prime debt as rivals.

Knight Vinke said: "If HSBC's accounting for its sub-prime assets had been as conservative as that of other banks its cumulative write down for sub-prime and related losses would now stand at approximately $50 billion in total rather than $25 billion - which makes HSBC the biggest causality of the sub-prime crisis so far."

Emphasis added by me.

I have to admit, I know nothing about HSBC and turned to wikipedia for this shocking news:

HSBC Holdings plc (LSE: HSBA, SEHK: 0005, NYSE: HBC, Euronext: HSBC, BSX: 1077223879) is a public limited company incorporated in England and Wales, headquartered in London. It is the world's largest company and the world's largest banking group, as calculated by the annual Forbes list of the world's largest firms published on April 2, 2008. In February 2008, HSBC was named the world's most valuable banking brand by The Banker magazine.

Emphasis added by me. I lightly edited that paragraph for better formatting.

And, of course, wikipedia shows its unreliability:

HSBC is well-known in banking circles for its diversified and risk-averse approach in its business operations (to the extent that, for instance, Europe contributes around one-third of its 2007 earnings and commercial banking 30%). Remarkably, HSBC has emerged from the recent American financial turmoil probably the least damaged of all the big banks, while it maintains its involvement in investment banking relatively (and to some critics, unduly) cautious and conservative.

Emphasis added by me.

I have to wonder. If it turns out HSBC has been hiding catastrophic losses, what about its competitors?

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