Income Majors 2019 

HSBC puts investors on buyback notice

HSBC puts investors on buyback notice

For most large UK banks, the attraction of share buybacks is palpable. The overarching reason for this – if we put aside the well-documented incentives for executive pay packets – is that the options for using surplus capital are limited. The battle for deposits is intense. Hunting a greater market share of dubious credit-worthy lending opportunities runs the risk of capital destruction. And, in any case, loan growth is constrained by intense competition, low interest rates and economic uncertainty. Added to this, regulators are intensely focused on major initiatives that would dampen capital ratios. It almost goes without saying that the days of banking mega-mergers are long gone.

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