Home News HSBC Holdings plc acts to stem scandal over mis-selling long-term care bonds
HSBC Holdings plc acts to stem scandal over mis-selling long-term care bonds
Thursday, 08 December 2011 09:30

News round up: HSBC, European banks, UK economy, AstraZeneca, Marks & Spencer and monetary union.


HSBC Holdings plc (LON:HSBA) has taken a dramatic step to stem the growing scandal over its mis-selling of long-term care bonds to elderly customers by offering to compensate investors who bought NHFA products long before the bank bought the scandal-hit investment advisor.

In a sign of the serious reputational damage HSBC has suffered since being handed a record £10.3m fine for mis-selling nearly £300m of investment bonds to elderly and vulnerable customers, the bank has pledged to examine cases of mis-selling dating back as far as 1991, some 14 years before it bought NHFA.

The move by the bank could dramatically increase the current £29.3m estimate of the cost of compensating customers who lost money as a result of being advised to buy unsuitable financial products by NHFA salesmen.

The backlash against the bank has been swift with public revulsion at the way NHFA customers, who have an average age of 83, were pushed into products that in some cases resulted in their families suffering losses of thousands of pounds when they died before their bond matured, writes the Telegraph.

European banks

Estimates from accountants Deloitte found that European banks hold more than £1.5 trillion of non-core and non-performing assets on their balance sheets. Deloitte estimates that while banks will have to drastically reduce the size of their asset books, they will probably encounter major challenges in doing so given the scale of the bad loan problems they face.

British banks, despite beginning their disposal programmes much earlier than their Continental European peers, still have by far the biggest pool of toxic assets. Deloitte estimates the size of the non-core and non-performing assets held on the balance sheets of UK banks at £460bn, more than the combined total for Ireland, Spain and Italy. German banks come a close second to the UK, with a toxic asset pool of about £447bn, says The Telegraph.

UK economy

Britain's economy will have lost five years of growth by 2013, a leading economic think-tank said today, as it will only then be back to the same size as it was in 2008. UK economic growth slowed in the three months up to November, with gross domestic product growing by 0.3 per cent - down from 0.4 per cent in the three months ending in October, said respected forecaster the National Institute of Economic and Social Research.

But more tellingly, the NIESR said that the UK economy would not recover the massive 7 per cent shrinkage from its early 2008 peak it experienced in 15 months of recession until late in 2013. 'Economic growth in the UK remains subdued,' NIESR said. 'These data lend support to the further loosening of UK monetary policy,' The Daily Mail reports.

AstraZeneca

AstraZeneca, one of Britain's biggest drugs companies, is cutting almost a quarter of its sales staff in America as it tackles a slowing market. he move will see about 1,150 staff lose their jobs in the US, which remains the biggest single market for the pharmaceutical industry.

AstraZeneca said that it will take a charge of up to $100m (£64m) this quarter to pay for the move, which will be finalised early next year. "These are difficult decisions that impact valued employees," said Rich Fante, who runs AstraZeneca's US business. "The changes we are making, however, will help us deliver better results for our business," The Telegraph reports.

Marks & Spencer

The Prime Minister of India was facing humiliation last night after he was forced to abandon a long-awaited plan to allow foreign chains such as Tesco to open supermarkets in the country. The U-turn, announced by Manmohan Singh in Parliament, followed two weeks of mounting street protests by shopkeepers who feared that the big multinational chains would drive them out of business.

Mr Mukherjee said that India still planned to lift ownership restrictions on “single-brand retailers” such as Marks & Spencer, who will be allowed to open their own stores. So-called “multi-brand retailers” — the foreign supermarket groups — will remain locked out, writes The Times.

Monetary union

The fate of Europe’s monetary union hangs in the balance today as its leaders struggle to revamp its broken machinery amid British demands that could force them to forge a pact outside the group’s 27-member structure.

Pessimism returned to Brussels as leaders gathered for tonight’s summit and assessed the daunting obstacles to the Franco-German push to lock enforceable budget rules into the EU’s treaties — a move designed to convince the world that the eurozone finally has the fix to save its currency, according to The Times.


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