HSBC in talks with Bank of England to free up £5bn in China, as regulators review capital policy
HSBC is in talks with the Bank of England to discuss how it might be able to free up £5bn currently locked up in its Chinese business.
The bank, which has a sizable amount of business in Asia, could use the money for activities such as funding new loans.
The Sunday Times first reported HSBC had proposed to regulators that it should be allowed to reduce the capital buffer it is currently holding against its 19 per cent stake in China's Bank of Communications, claiming the Bank is being too pessimistic in its risk assessments.
Although the talks are understood to have been ongoing for some time, the Prudential Regulation Authority earlier this month published a paper on durable links, which examines how much capital a bank should be on the hook for if it holds a stake in another lender of less than 20 per cent.
Read more: Treasury committee chairman seeking assurances over bank on IT health
The Bank of England has declined to comment. HSBC declined to comment on the current story. However, Iain Mackay, HSBC's group finance director, told analysts at the time of the interim results:
The conversation and discussion with our principal regulator continues. It’s a good conversation, but it is ongoing.
HSBC is due to reveal its results for its third quarter next Monday.
In February, the bank announced it had decided to keep its headquarters in London, after some speculation it could be about to move it to Asia.