HSBC takes $188m hit from Carillion and Steinhoff write-downs

HSBC has been forced to take a $188m (£135m) hit from the fallout of collapsed contractor Carillion and troubled retailer Steinhoff.

In its annual results presentation, the British banking giant said loan write-downs were “mainly driven by two individual corporate exposures”.

City sources said the two companies in question were Carillion and Steinhoff.

HSBC was a leading member of Carillion’s syndicate of lenders. What was Britain’s second-biggest contractor collapsed in January under the weight of £1.5bn of debts. Meanwhile, South African firm Steinhoff – which owns UK names such as Poundland and Bensons for Beds – said in December it had uncovered a number of accounting irregularities.

The losses contributed to HSBC missing analyst profit expectations this morning, prompting shares to fall almost five per cent as markets opened.

Read more: HSBC doubled profits miss expectations as Gulliver goes on his travels

The $188m impairments were the largest part of a $373m hit taken by HSBC’s global banking arm in the fourth quarter – bad debts equated to more than half a penny of every pound of loans issued. Write-downs over the same period last year were just $10m.

Loan losses across the wider HSBC group in the final three months of 2017 were $658m, up from $470m in 2016 and $440m in the third quarter of 2017.

Last month Santander’s UK arm said loan impairments had tripled as a result of Carillion’s collapse. With 2017 loan write-downs of £203m, Santander’s UK chief admitted profitability had been hit by Carillion’s failure.

Carillion’s former interim chief executive claimed its lenders “undermined” attempts to save the firm. Keith Cochrane singled out Santander and Royal Bank of Scotland for restricting lending facilities in the weeks leading up to Carillion’s collapse on 15 January.

Read more: Carillion’s banks were left on the sidelines while shares plummeted