Chillin' out till it needs to be funded
The state-sponsored bail-outs of western banks risk rewarding management teams for failure, the chief executive of HSBC warned.
Michael Geoghegan’s comments on Monday reflect a deep frustration the recent bail-outs has caused among executives at HSBC, which, despite suffering heavy losses in the US mortgage market, has weathered the credit crisis in better shape than many of its rivals.
He said: “There is no question that guarantees have been given to failed managements.
“I hope these guarantees don’t last too long because they may create the wrong type of behaviour by managements in those banks.”
He added that they risked distorting the market.
However, HSBC executives acknowledged the rescues in the US and Europe were necessary to stabilise the banking system and restore the flow of credit to the economy.