HSBC bankrupt and on the brink of collapse?

James Ryan Jonas

An article entitled “HSBC Bank on Verge of Collapse: Second Major Banking Crash Imminent” is currently making its rounds on social media, causing several people to panic and leading some users to ask whether they should start withdrawing their money from HSBC.

The article alleges:

Concerns about an imminent bank crash were further fuelled today at news that HSBC are restricting the amount of cash that customers can withdraw from their own bank accounts. Customers were told that without proof of the intended use of their own money, HSBC would refuse to release it. This, and other worrying signs point to a possible financial crash in the near future.

HSBC is scrambling to manage a seemingly terminal liquidity crisis (a lack of hard cash) that could see the bank become the next Northern Rock – and trigger a bank crash. The analyst’s advice is for shareholders to sell HSBC investments, and customers to move their accounts elsewhere before the crash.

Is this report accurate? Is HSBC really on the verge of bankruptcy and collapse?

HSBC bankrupt and on the verge of bank crash?

First, a quick check on the website that carries the story ( shows very little information about the people or company running the site which puts its credibility into question.

The website also seems to make a haphazard conclusion by connecting various news report to the purported imminent crash of HSBC.

One report cited is that published on The Mirror, a UK tabloid, that HSBC has “refused to let some customers withdraw large sums of cash over the counter unless they can prove why they need it.”

HSBC customers required to show proof before making large cash withdrawals?

According to The Mirror news article:

The bank has admitted it made a change to its policy in November without informing customers.

In a statement, the bank said: “We ask our customers about the purpose of large cash withdrawals when they are unusual and out of keeping with the normal running of their account.

“Since last November, in some instances we may have also asked these customers to show us evidence of what the cash is required for.

“The reason being we have an obligation to protect our customers, and to minimise the opportunity for financial crime.

However, following feedback, we are immediately updating guidance to our customer facing staff to reiterate that it is not mandatory for customers to provide documentary evidence for large cash withdrawals, and on its own, failure to show evidence is not a reason to refuse a withdrawal.”

Another story is that posted on Yahoo! Finance UK this week claiming that some of the bank’s assets are overstated and that additional capital may be needed before the end of the decade.

Overstated assets and capital injection needed?

The article goes:

In the report, the analysts apply what they describe as a “moderate stress test” to the balance sheets of HSBC’s major subsidiaries. From this analysis they conclude that even using a low-end estimate, the assets of the bank’s Hong Kong division, for instance, are overstated by about $15 billion, while those of its UK subsidiary could be overvalued by $17 billion.

Taking the analysis further, the report sets out the impact of incoming Basel III capital rules and says HSBC could be required at a minimum to raise close to $60 billion in new capital by 2019 and potentially as much as $111 billion.

Aren’t these ominous signs that the bank may be in trouble?

The simple answer is: We don’t know.

And we are also of the opinion that it is dangerous to assume anything unless we know all the facts.

In the past, rumors of bank runs and bank holidays bring fear to clients, fueling panic withdrawals that could ultimately lead to liquidity problems of banks. Once banks start facing liquidity issues and servicing clients’ withdrawals becomes difficult, that’s when the real problem begins.

Our advise: do NOT spread any unconfirmed reports or rumors on Facebook and social media, unless these have been proven to be factual or correct. It will only create confusion and chaos among customers.

It is best to stay calm and to wait for official announcements from the bank or from central bank officials before we do any irrational actions.

About HSBC

Hongkong and Shanghai Banking Corporation (HSBC) is a British multinational banking and financial services company headquartered in London, England, United Kingdom.

As of 2012, it was the world’s largest bank in terms of assets and sixth-largest public company, according to a composite measure by Forbes magazine. HSBC has around 7,200 offices in 85 countries and territories across Africa, Asia, Europe, North America and South America, and around 89 million customers.

James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.