HSBC may be forced to repossess its own home

The banking giant HSBC is considering repossessing its own Canary Wharf headquarters, as it holds talks with the troubled Spanish property company that owns the building.

Metrovacesa, which bought the building from HSBC for more than £1bn in a sale and leaseback agreement in 2007, is facing increasing financial difficulties and looks unable to service the debt it raised from HSBC itself to buy the skyscraper.

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HSBC helped Metrovacesa at the time by giving it a bridging loan of £810m, with the idea being that it would be refinanced. The crash in the real estate and mortgage markets completely changed the parameters in the debt market, however. The loan comes due on 28 November and it looks almost impossible that it will be rolled over.

The heavily indebted Metrovacesa is trying to stay afloat after a huge crash in Spanish real estate. The Sanahuja family, which owns more than 80 per cent of Metrovacesa, said this month it could exchange debt for a substantial swathe of the company's shares and some property, adding that creditors would be prepared to consider the deal.

One option under discussion with HSBC would see the bank take the building back and write off the £810m loan. This would enable it to pocket the roughly £200m in cash paid by Metrovacesa for the 42-floor building, which is located on Canary Wharf's Canada Square. Construction work on the site was completed in 2002.

Another possibility is that HSBC would offset interest payments on the loan against its rent, as the figures are similar. Or it could again roll over the facility, although this seems unlikely.

A spokesman for HSBC said: "We never comment on client business."