|The News Line: News
Tuesday, 31 July 2012
EURO CRISIS CRUNCH TIME
US TREASURY Secretary Timothy Geithner held emergency meetings with German finance minister Wolfgang Schaeuble and European Central Bank chief Mario Draghi yesterday.
Markets had surged after Draghi said last Thursday that the ECB would preserve the euro ‘by all means necessary’.
Over the following days, the leaders of Germany, France and Italy also said they would do all they could to protect the 17-country currency union.
But yesterday, German Economy Minister Philipp Roesler warned the ECB against any large-scale government bond purchases, and a German government spokesman reiterated Berlin’s opposition to any form of ‘mutualisation’ of eurozone debt.
Meanwhile, a report from risk analysis consultancy firm Maplecroft says the UK is more vulnerable than any other nation in the world to a worsening eurozone crisis and its economy would be hit the most if the euro falls apart.
Around 50% of UK trade is conducted with countries within the eurozone, and a collapse of euro countries such as Spain and Italy could prompt a 7 per cent drop in UK trade and result in losses of around £95bn in Britain’s banking sector.
The UK is one of only 18 nations rated ‘extremely vulnerable’ in the 169-nation eurozone exposure index, the research found, adding that Britain was in no economic shape to turn things around if the crisis in the eurozone worsens.
Other factors cited by the study were the UK’s exposure to £380bn in European banks and sovereign bonds.
The HSBC boss said yesterday that revelations of money laundering at the bank had been ‘shameful and embarrassing’, and may force it to pay out well over $2 billion.
HSBC has set aside $700 million to cover fines and other costs over the money laundering scandal, after a US Senate report criticised it for letting clients shift funds from ‘dangerous and secretive countries’, notably Mexico.
HSBC also set aside another $1.3 billion to compensate British customers for mis-selling loan insurance to individuals and interest rate hedging products to small businesses.
The ultimate cost could be ‘significantly higher’, HSBC Chief Executive Stuart Gulliver said. ‘What happened in Mexico and the US is shameful, it’s embarrassing, it’s very painful for all of us in the firm,’ he added.
The Senate report criticised the ‘pervasively polluted’ culture at the bank and said HSBC’s Mexican operations had moved $7 billion into its US operations between 2007 and 2008.
HSBC is also one of more than a dozen banks under scrutiny in the Libor rate-rigging scandal.
An inquest at Southwark Coroner’s Court heard yesterday that the man who fell to his death from a fifth-floor balcony in the members’ bar area of the Tate Modern Gallery on the South Bank of the Thames last Tuesday evening was a ‘senior bank manager with HSBC’.
Michael Foreman, 48, died from ‘multiple traumatic injuries’. He had worked for HSBC for 30 years and was based in head office in Canary Wharf in the business banking section.
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