Chillin' out till it needs to be funded
Both Barclays and HSBC have emerged as relative winners from the financial crisis.At the height of the crisis last October, both banks kept their distance from government money and are now in a position to exploit opportunities in sectors such as investment banking at the expense of weaker rivals.
Monday’s first-half results showed that both HSBC and Barclays have taken advantage of the frantic trading in bonds, interest rate products and currencies, and profits from investment banking are offseting rising bad debts from consumers and businesses.Barclays Capital’s first-half profits almost doubled to £1bn and HSBC’s global banking and markets business reported record first-half profits of $6.2bn £3.7bn against $2.7bn in the first half of last year – a seven-fold increase on the second half of 2008.But the contrasts between the banks are more striking than their similarities.Barclays used the banking crisis to expand its investment banking operations by buying part of Lehman Brothers last year. HSBC used it to wind down its US consumer finance operation and focus onrapidly-growing emerging markets
zyakaira notes: Despite the confident assertions, both banks have scraped by Barclays losing BGI and still depending on BarCap while HSBC forced to freeze all personal lines in markets like India and raise rights capital. Both are still suffering from rising bad debt and uncontrolled operational laxity while reiterating strengths in emerging markets in India incl more operational units transferred. Also Barclays is reportedly under tremendous underwriting losses in its bid to expand as NBFC in India