Sars to cost Standard and HSBC more than £100m

The Sars outbreak is set to cost HSBC and Standard Chartered, the two UK banks with substantial Hong Kong operations, more than £100m.

The banks are to come under pressure to make a statement about the financial impact of the the flu-like disease, which has caused widespread problems in China, Hong Kong and parts of South-east Asia.

Last week, analysts at JP Morgan warned that Sars will have a negative impact on Standard Chartered, which has a large commercial banking business across Asia. Kris Commeren, the banking analyst, has already cut his estimates for the bank by $100m (£63m) because of the rise in personal bankruptcies due to worsening economic conditions. It is set to cut estimates further as Sars takes effect.

HSBC would be even har-der hit than Standard Chartered, as it has a large retail bank in Hong Kong in addition to extensive commercial banking operations. Citigroup economists recently said that Sars would cut growth by at least 1 per cent in Hong Kong and Singapore, and 0.3 per cent in China. If this is borne out, the cost to the two UK banks will be in excess of £100m.

Standard Chartered's chief executive, Mervyn Davies, has banned non-essential travel for executives because of fears they could catch Sars.

US scientists have asked leading drug groups, including the UK's GlaxoSmithKline and PowderJect, to work on a vaccine to treat the disease.