HSBC considers floating UK banking business

Britain’s largest bank is reportedly sounding out investors to assess whether to list its UK retail and banking operation.

Board members at HSBC are apparently considering a flotation of up to 30% to help the bank cope with planned new rules that demand that British banks ring-fence their retail arms, the Financial Times has reported.

Investors have estimated that the float could be valued at £20 billion.

The incoming Vickers rules – soon to be introduced following Sir John Vickers’ independent commission on banking – demand that banks safeguard their retail arms, which includes customer deposits and small business loans, from riskier investment banking activity.

Under the reforms banks are not required to formally separate, but insiders are suggesting that many of the bigger banks will choose to spin off their retail units, according to the Financial Times.

“Given the trouble you have to go to to establish a self-contained operation, with its own capital and governance, you might as well go the whole hog and spin it off,” explained one anonymous executive. 

Lloyds Banking Group is preparing to float its TSB subsidiary next year while the Royal Bank of Scotland is planning to float a new bank under the Williams & Glyn’s brand in 2015.

HSBC has attracted sustained criticism recently for its environmental performance.

In October, a report by the World Development Movement revealed how big British banks, including HSBC, have been complicit in fuelling climate change and destroying communities through their financing of an Indonesian coal boom.

Together RBS, Barclays, HSBC and Standard Charter are estimated to have financed the coal industry with €13 million (£10 million) between 2005 and 2013. Campaigners recently marched outside HSBC’s Canary Wharf HQ to deliver the bank a box of coal in protest. 

HSBC has also recently been accused of “bankrolling the destruction of rainforests” that are essential for the survival of orangutans and other endangered species.

Further reading:

High street banks’ coal investments linked to destruction of Borneo rainforests

Citi, Morgan Stanley and Bank of America top funders of coal, says report

HSBC accused of ‘bankrolling deforestation’

Campaigners urge HBSC to move away from fossil fuel investments

High street banks’ coal investments linked to destruction of Borneo rainforests