HSBC rules out banking crisis as profits triple after Silicon Valley Bank deal
HSBC’s chief executive has denied the possibility of a fresh banking crisis, saying the failure of four banks in six weeks was a merely a sign of poor risk management, as the lender tripled its own first quarter profits to $13bn (£10bn) after its rescue of Silicon Valley Bank UK.
Noel Quinn’s comments came a day after JP Morgan stepped in to buy most of the collapsed lender First Republic in a $10.6bn takeover, as part of regulators’ efforts to draw a line under lingering turmoil across the banking sector.
“We’re pleased that there was a resolution on First Republic at the weekend so that that situation has been resolved,” Quinn told journalists during a conference call on Tuesday.
“We do not believe that there is a global banking crisis on the horizon. We think there are some challenges that have been evidenced in some of the regional banks in the US, but we do not believe that’s systemic in the US, or across all banks.”
First Republic – which focuses on high net worth clients – is the fourth global bank to collapse since early March, after the failures of Silicon Valley Bank, the New York-headquartered lender Signature Bank and Switzerland’s second-largest bank, Credit Suisse.
The HSBC boss said recent failures were the result of banks taking greater risks to increase their profits. “It’s all about having a balanced risk appetite and return aspirations. And I think normally when one gets out of sync with the other, and the pursuit is: ‘profit at the expense of a managed risk appetite’, that’s normally when challenges emerge. And therefore that’s the probably the lesson on SVB or some of the regional banks in the US.”
HSBC bosses applauded their own bank’s performance, after reporting that profits had tripled to $12.9bn in
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