HSBC sides with Beijing over Hong Kong; overdraft fee haul

Receiving Wide Coverage ...

Choosing sides

HSBC has come down “squarely on the side of Beijing in the fight over the future” of Hong Kong, the Wall Street Journal reports. “In a post on one of HSBC’s social media accounts in China, the bank’s Asia-Pacific head Peter Wong is seen signing a petition in support” of a new law that gives the mainland government greater control over the territory. In the post, the bank said “HSBC respects and supports any laws that stabilize the social order in Hong Kong and revitalize economic prosperity and development in Hong Kong."

Matthew Lloyd/Bloomberg

“The global bank, based in the U.K. but whose roots and profits grow mostly from Hong Kong and Asia, had been under pressure in recent days to come out publicly over the law. The U.S., U.K. and other Western governments have strongly objected to the new law, saying it breaches an agreement that granted Hong Kong a degree of autonomy when the U.K. handed back control of the city to China in 1997.”

“HSBC’s move is likely to be contentious with both politicians in the U.K., where the bank is based, and parts of its Hong Kong customer base, who see the proposed legislation as potentially overriding the Hong Kong justice system and as a threat to the ‘one country, two systems’ framework,” the Financial Times said.

Wall Street Journal

Getting around it

“Lenders that target struggling borrowers for loans with triple-digit interest rates have overcome years-long efforts to restrict their lending and are pitching their products to consumers in need of cash during the coronavirus pandemic,” an investigation by the Journal found. Payday lenders have “sidestepped state crackdowns by joining with out-of-state banks to offer loans and now are bypassing ad bans put in place by Google and Facebook.”

“The investigation, involving hundreds of online searches, shows that the lenders are marketing loans that typically carry annual percentage rates of around 200% to 500% to consumers looking online for financial help amid the biggest wave of job losses in U.S. history. Many banks have been tightening underwriting standards in recent weeks, making it harder for consumers with low credit scores to get credit cards and other types of financing.”

No-show jobs

Investment banker Evercore Partners “is offering to pay incoming junior bankers up to $25,000 to delay starting their jobs during the coronavirus pandemic, according to external recruiters, a move that hasn’t been seen on Wall Street since the last financial crisis. Recent college graduates who were due to start at Evercore later this summer will get $15,000 if they defer their start date until January and $25,000 if they wait until next summer to join, said recruiters who are in touch with incoming employees.”

“In 2009, when banks were cutting costs and laying off employees, thousands of college graduates bound for Wall Street were paid to delay their start dates. Banks aren’t in financial distress this time, but they are bracing for a decline in deal-making as the pandemic drags on.”

Financial Times

Plastic, not paper

“More than half of all payments in the U.K. were made by card and contactless methods last year, making Britain a majority card-based society for the first time as the coronavirus crisis accelerates the move away from cash,” the FT reports. “Payments made by credit, debit and charge cards accounted for 51% of the 40 billion payments made over the year, with contactless payments rising 16% to 8.6 billion,” according to the bank lobbying group U.K. Finance. “Meanwhile the use of cash fell 15% to make up less than a quarter of all payments.”

Pandemic? No problem

Wirecard, the German payments company that “faces intense scrutiny over its accounting practices,” said Wednesday “that a strong additional surge in online transactions in Asia and Europe had compensated for the negative effects of coronavirus on its payments processing business. The Dax-listed technology group is one of the few large companies to predict no impact on its pre-pandemic forecasts for 2020, even as it has blamed Covid-19 for delays to the publication of audited financial statements for 2019.”

New York Times

Overdraft bonanza

“Large U.S. banks took $11.68 billion in overdraft fees out of their customers’ accounts last year, even before the pandemic kicked off an economic crisis,” the Center for Responsible Lending said. “Vulnerable people were by far the hardest hit: Nine percent of account holders paid 84% of the overdraft fees, according to the review, which focused on banks with assets of more than $1 billion. Those customers tended to carry low balances, averaging less than $350.”

“The group, which supports policies to improve access to the financial system for poor and marginalized groups, urged banks to waive overdraft fees voluntarily, but said it was also backing a proposal to ban such fees during the pandemic.”

PPP revisions

The Senate passed a bill Wednesday “that would relax the terms of the Paycheck Protection Program. The bill, approved overwhelmingly by the House last week, would extend to 24 weeks from eight weeks the time that small businesses would have to spend the loan money. The bill also would give companies greater flexibility to use the loan money on other business expenses, like utilities and rent, by lowering the amount required to be spent on payroll to 60%, from 75%. The measure now heads to President Trump’s desk.”

Quotable

“Banks should not experience an unprecedented windfall as the direct result of their customers’ unprecedented distress.” — Peter Smith, a researcher at the Center for Responsible Lending, which said large banks earned nearly $12 billion from overdraft fees last year.