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HSBC flexes its muscles with $1.3 loan from parent

Who needs the governments new loan facility? Who needs to dilute shareholder interests?

HSBC Holdings has flexed its muscles in the UK by handing over a $1.3 billion cash injection to its UK subsidiary HSBC Bank. The move was made overnight with the minimum of fuss, no big headlines and a business as usual sign on the door. While the UK operations of HSBC Holdings are in no way struggling the cash injection does add more strength to the group now and when the upturn finally comes.

The cash came from existing shareholder funds and represents under 1% of the overall value of the parent group, meaning that shareholders were not diluted and no additional funding was taken on. These are the signs that the UK markets want to see, these are the signs which will slowly see confidence returning to markets and these are the first signs that a recovery might not be too far off!

It will come as no surprise to those aware of HSBC that the group will not be participating in the governments 'generous' offer of a capital injection in exchange for an equity stake, thereby taking one 'maybe' off the list.

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