HSBC poised to write off $2bn in Argentina crisis

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The Independent Online

The Argentinian crisis could cost HSBC as much as $2bn (£1.4bn), and City analysts are slashing forecasts for the UK-listed international bank.

HSBC is among the largest foreign banks in Argentina. Last August, it said its total exposure was $4.9bn, and made provisions of $338m. But, more recently, the Argentinian central bank said HSBC had $5.7bn invested or lent in the country.

Sir John Bond, HSBC's chairman, has tried to damp down worries about the cost of the crisis to the bank. But recent draconian economic measures and the replacement of the currency have sent shivers through the banking system.

Goldman Sachs, the investment bank, last week said it expected HSBC to add at least $693m of extra provisions against Argentina when it reports its full-year results next month. Simon Maughan, a banking analyst, said he feared this could go up to $1.58bn if the economic measures announced by the latest Argentinian president, Eduardo Duhalde, do not succeed. John Tyce, at SG Securities, has pencilled in likely provisions of $1bn but added: "The basis of the devaluation is to make Argentinians poorer. I fear the losses for HSBC could reach $2bn."

The bank's shares have been hit by downgradings from, among others, its own subsidiary, HSBC Securities and Merrill Lynch and Citigroup. Another report, by Dresdner Kleinwort Wasserstein, is due tomorrow and that is likely to hit the shares even further.

Lloyds TSB and Barclays have "modest" operations in Argentinian. Analysts expect Lloyds TSB's provision to be no more than £50m.