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Financial contagion warning as HSBC is told to brace for ‘catastrophic’ £6.3billion hit

Bob Lyddon fears losses in Hong Kong and China could “blow a hole in the bank’s equity”.

HSBC is facing a “hit” of more than £6.3billion as a result of unsecured commercial property loans into China, a UK-based tax consultant has warned.

Bob Lyddon branded the situation a ‘disaster’ – and warned of a “financial contagion” risk which could have a knock-on effect on Britain’s economy.

HSBC earlier this month confirmed it was setting aside £910million to cover expected loan losses, including £412million related to the commercial real estate sector in China – but Mr Lyddon said the actual picture was much worse.

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The founder of Lyddon Consulting Services outlined his concerns in an analysis specifically written for – and has urged the bank not to underestimate the seriousness of the situation.

He explained: “HSBC’s stake in its Chinese bank – Hang Seng – looks overvalued by £3.3billion given the benchmark set by Standard Chartered.


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