Europe’s politicians might hunger for a spending splurge, but HSBC is happy sitting on its billions
HSBC chief executive Stuart Gulliver could be forgiven for taking on the airs of some kind of elder statesman or central bank governor yesterday.
He had been planning a call on the bank’s latest results, but was peppered with questions on all the latest European political developments.
Austerity: necessary. A Greek euro exit: possible but hardly disastrous. As for France’s new president, Gulliver responded with the verbal equivalent of a shrug.
But the questions signal an unwelcome shift back into a macro-obsessed environment. “I don’t have control over how the Eurozone evolves,” he said, somewhat philosophically. Unfortunately, European lenders are operating in an increasingly dangerous environment as the debt crisis and new regulations collide. “The [ECB’s] LTRO has made the interbank market even more risky because of asset encumbrance,” he warned. “And we’re mindful of depositor preference in some countries.”
Which means: it is getting trickier for banks to sell debt. HSBC runs on minimal levels of wholesale funding due to the deep cash reserves it gets from having trillions in customer deposits on hand.
But in a sign of the bank’s worries for Europe, that reserve is only getting bigger: HSBC now has a staggering $153bn on hand in its accounts at central banks.
Europe’s statesmen and central bankers might wish they could say the same.