Business | Banking
HSBC, other UK banks face huge debt renewal
HSBC Holdings, Royal Bank of Scotland Group and the biggest UK banks face the most debt coming due in at least 10 years as the credit market seizure raises borrowing costs to the highest on record.
- Bloomberg
- Published: 00:32 October 9, 2008
London: HSBC Holdings, Royal Bank of Scotland Group and the biggest UK banks face the most debt coming due in at least 10 years as the credit market seizure raises borrowing costs to the highest on record.
The six largest British banks have £54 billion ($95 billion) of debt to refinance by April, triple the amount of the year-ago period, according to data compiled by Bloomberg. HSBC, the UK's biggest bank, and RBS each have about £11.5 billion of debt due, while Barclays has £15.9 billion maturing, the data show.
Financing costs are soaring as banks hoard cash after the credit crunch triggered by the US subprime mortgage crisis a year ago. The three-month London interbank offered rate in dollars rose to 4.52 per cent from 2.64 per cent in March, while the equivalent rate for euros increased to a record 5.39 per cent, from 4.74 per cent six months ago.
Rates rose this month even as the UK announced a cash injection to prevent a collapse of the banking system, Europe's policy makers provided emergency funding and US President George W. Bush approved a $700 billion rescue plan.
The UK government will invest about £50 billion in the banks, the Treasury said on Wednesday.
The government will buy preference shares and the Bank of England will make at least £200 billion available for banks to borrow under the so-called special liquidity plan. The government will also provide a guarantee of about £250 billion to help refinance debt, the statement said.
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