FORM 6

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Report of Foreign Private Issuer

Pursuant to Rule 13a - 16 or 15d - 16 of

the Securities Exchange Act of 1934

 

For the month of  July

HSBC Holdings plc

42nd Floor, 8 Canada Square, London E14 5HQ, England

 

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F).

Form 20-F   X              Form 40-F ......

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934).

Yes.......          No    X

(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ..............).

 

 

 
23 July 2010
 
 
CEBS STRESS TEST CONFIRMS STRENGTH OF HSBC'S CAPITAL POSITION
 
 
HSBC welcomes today's publication by the Financial Services Authority (FSA) and the Committee of European Banking Supervisors (CEBS) of the results of the EU-wide stress test exercise1.
 
HSBC notes that on the basis of the modelled macro-economic assumptions, and under the severe stresses applied in the simulated 'adverse scenario', which included additional European Economic Area (EEA) sovereign shock, HSBC's tier 1 ratio is shown at 10.2 per cent, which is above its target range. On this basis, HSBC would remain fully in compliance with current regulatory requirements without any need to raise further capital.
 
Michael Geoghegan, HSBC Group Chief Executive commented: "We are pleased to note the FSA's conclusions on this exercise and view it as a timely and important contribution to building investor and market confidence and supporting financial stability. The outcome for HSBC reinforces what we have been saying - that HSBC is both financially strong and well positioned to deal with any further foreseeable economic downturn."
 
HSBC has been profitable in all three years since the financial crisis began and did not need government recapitalisation.
 
The stress test exercise was based on the application of commonly agreed macro-economic scenarios to data provided by selected EU banking institutions mainly based on their balance sheets and risk
exposures as at 31 December 2009.
 
 
In addition HSBC, along with other banks which are the subject of this exercise, is disclosing its EEA Sovereign debt exposures as at 31 March 20102. 
 
HSBC will report its results for the six months to 30 June 2010 on Monday, 2 August 2010.
 
 
Media enquiries to Patrick McGuinness on +44 (0) 20 7991 0111 or at patrickmcguinness@hsbc.com
 
Notes to editors:
 
Footnotes
1.  The Committee of European Banking Supervisors (CEBS) today announced the conclusions of an EU-wide exercise aimed at assessing the overall resilience of the EU banking sector, EU banks' ability to absorb further possible shocks on credit and market risks, including sovereign risks, and the dependence of EU banks on public support measures. 
 
As previously announced by the CEBS, this exercise involved the application of commonly agreed macro-economic scenarios developed in close cooperation between the CEBS, national supervisory authorities, the European Commission and the European Central Bank. 
 
The exercise covered a sample of cross-border banking groups and key domestic credit institutions in Europe, representing 65 per cent of the EU banking sector in terms of total assets. HSBC is one of the banking groups included in the exercise. 
 
As stated by the CEBS, it should be noted that
a stress testing exercise does not provide forecasts of expected outcomes, but rather a what-if analysis aimed at supporting the supervisory assessment of the adequacy of capital of European banks
. 
 
While HSBC provided the UK FSA with financial information required in order to enable the stress test to be applied to it, the macro-economic scenarios which are applied to that information were developed by the CEBS in close co-operation with other European institutions as mentioned above.
 

2.  Table of HSBC's EEA Central and Local Government Exposures
 
 
Amounts in
US$ million
Gross exposures (net of impairment)
of which
Banking book
of which
Trading book
Net exposures (net of impairment)
Austria
-404
0
-404
-437
Belgium
2,438
2,004
434
2,438
Denmark
1,494
1,547
-53
1,494
Finland
431
0
431
431
France
20,808
7,115
13,693
18,450
Germany
16,690
6,209
10,481
16,654
Greece
1,935
366
1,569
1,935
Hungary
239
0
239
239
Ireland
816
0
816
816
Italy
6,247
404
5,843
6,247
Luxembourg
218
222
-4
218
Malta
343
343
0
343
Netherlands
4,642
3,962
680
4,642
Norway
427
27
400
27
Poland
685
151
534
685
Portugal
698
472
226
698
Slovenia
204
204
0
204
Spain
101
1
100
101
United Kingdom
22,277
19,688
2,589
22,009
Others
276
142
134
243
Total
80,565
42,857
37,708
77,437
 
 
The table above summarises the aggregate of the HSBC's in-country foreign and local currency and cross-border exposures to EEA central and local governments as at 31 March 2010 which individually represent in excess of US$ 100 million. Individually, HSBC has gross exposures of less than US$100 million to each of the following members of the EEA: Bulgaria, Cyprus, Czech Republic, Lithuania, Slovakia and Sweden and for convenience these are grouped together in our disclosure as 'Others'. HSBC has no exposure to Estonia, Iceland, Latvia, Liechtenstein and Romania. In accordance with the Bank of England Country Exposure Report (Form CE) guidelines, exposures are defined as including loans and advances (excluding settlement accounts), amounts receivable under finance leases, acceptances, commercial bills, Certificates of Deposit and debt and equity securities (net of short positions), and exclude accrued interest. Cash balances with the Bank of England are excluded for the purpose of this exercise. Form CE is compiled on a regulatory consolidation basis.
 
The gross figures disclosed are the net of long and short positions but gross of credit risk mitigation ("CRM"). Net figures are gross figures reduced by the amount of CRM that is eligible under the Capital Requirements Directive.
 
 
HSBC Holdings plc
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 8,000 offices in 88 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. With assets of US$2,364 billion at 31 December 2009, HSBC is one of the world's largest banking and financial services organisations. HSBC is marketed worldwide as 'the world's local bank'.

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

HSBC Holdings plc

By:       

Name: P A Stafford

Title: Assistant Group Secretary

Date: 23 July 2010