Regulations cost us $28bn – HSBC chief

THE chief executive of HSBC has attacked Britain’s red tape culture and claimed it has knocked up to $28bn (£17.68bn) from the value of the bank.

Stuart Gulliver (pictured) said HSBC is “permanently” under-valued and admitted he has raised his concern over the cost of the banking levy with the Treasury.

His comments came just days after HSBC posted a 15 per cent profit rise to $21.9bn, the highest 2011 figure so far of any Western bank. He has also asked the Treasury to consider collecting the levy through a windfall tax, which would prevent it from damaging HSBC’s dividend.

Gulliver said the levy will cost HSBC about $700m this year with another $2.1bn a year coming from “plaque” or primary loss-absorbing capacity – the Treasury suggestion that banks hold enough capital to cope with losses equal to 20 per cent of their balance sheet.

“The plaque thing and the levy are the only two things that have got investors worked up,” Gulliver told The Sunday Telegraph, saying their hit on market capitalisation was tenfold, equivalent to about 17 per cent of HSBC’s value.

“So there’s about a $2.8bn cost to those two. Assume a PE [price-earnings ratio] of 10, to keep the maths easy, assume $28bn permanently off the market cap.”

Gulliver, a former investment banker, also issued a staunch defence of “casino” banking, after attacks on its role in the crisis.

“The thing that has been lost is actually that the so-called casinos subsidised the retail banks, not the other way round... None of the banks that failed in the UK failed because of their casino – which is an inconvenient truth.”