HSBC Holdings Plc. (NYSE:HSBC) And Bank Of China Will Not Waive Interest Fees On Margin Loans

HSBC Holdings Plc. (NYSE:HSBC) and Bank of China which are the two largest margin lenders for the suspended Ant Group IPO in Hong Kong expects to pocket around $32 million in interest income. This comes after the lenders opted not to wave interest charges even as some stockbrokers and smaller banks waived the charges.

Ant Group IPO suspended

Since Wednesday, Ant Group has been refunding investors after Chinese regulators halted its mega dual listing in Hong Kong and Shanghai stock exchange markets. The Alibaba Holdings (NYSE:BABA) affiliated company said that by the end of the week it would have refunded 1.55 million retail investors with a record HK$1.3 trillion. However, according to estimates from brokers, investors that took margin loans to acquire Ant shares faces up to HK$60 million in interest payments.

The lenders who were among the note-issuing banks in Hong Kong will take the most extensive cuts after extending almost HK$500 billion in margin loans offered by all stockbrokers and banks on the city. The HSBC and BOCHK’s decision not to waive interest charges comes as the lenders face growing pressure on their margins following an extended period of low-interest rates. This is unlikely to change before 2023 with central banks looking to bolster economies impacted by the COVID-19 pandemic.

HSBC lent HK$150 billion and BOCHK HK$100 billion

According to an HSBC spokesperson, the lender is refunding customers as per the IPO loan terms and conditions. HSBC extended margin loans of around HK$150 billion in margin loans at 0.48% and 0.88% interest rate for five days. As a result, the bank will get an income of around HK$109 million to HK$18 million will BOCHK gave loans of HK$100 billion at 0.5%.

Hong Kong businesswoman, Kenia Cheng, said that she was disappointed after borrowing $HK16 million to subscribe to the IPO. She said she now can’t get shares but will have to pay interest fees to HSBC. The bank’s CFO Ewen Stevenson said that the bank was considering changing to a free-based model for deposit customer as its grapples with low-interest rates.