Cash inflows into HSBC up

HSBC says it is seeing daily inflows into its UK deposit accounts of 50 times the levels seen last year.

Douglas Flint, HSBC’s finance director, told analysts on Friday that deposits were coming in at 50 times their normal rate.

A spokesman confirmed that the bank had seen a spike in deposit inflows after it confirmed earlier this month that it would not be seeking a loan from the government to meet its capital requirements.

The government had announced a £50bn fund for banks in exchange for preference shares, in a bid to help them recapitalise.

Lloyds TSB, HBOS and Royal Bank of Scotland have all said they will be taking money from the pot.

The flight into HSBC appears to be more about the perceived safety of the global bank than its competitive rates, said analysts. Its current account pays no interest to customers, while both Barclays and RBS pay 01. per cent, according to latest figures from comparison website moneysupermarket.com.

On fixed rate accounts, HSBC does compare more favourably, paying 6 per cent AER against 4 per cent from Lloyds TSB’s Classic Plus and 3 per cent from Barclays’ Additions Active account.

But Rachael Hedger, research manager at independent analyst Defaqto, commented: “If anything, it proves that maybe not the rate alone would be considered when opening an account – while HSBC certainly offers a very competitive rate it’s only payable on balances up to £1,000.”

Barclays, by contrast, has no upper limit.

Kevin Mountford, head of savings at moneysupermarket.com, said: “HSBC is benefiting from the nervousness in the market. We’ve seen quite a flight to what are perceived to be the safer brands and both HSBC and Standard Chartered are the beneficiaries of that.”

An HSBC spokesman said there were three main trends to the deposit inflows. First, investors were moving money across from other UK institutions. Second, the bank is seeing lump sum deposits of £50,000 – the current compensation limit from the government if an institution goes bust, suggesting savers are spreading their money around different banks. Third, high-net worth clients in particular are said to be flocking to HSBC.

HSBC said that market fears over its exposure to struggling Asian markets, which saw its share prices drop to a five year low last week, will not affect its strong deposit inflows in the UK.

“People are more concerned about what happens on the UK high street – we haven’t noticed any change in sentiment,” said a spokesman.

HSBC has also been named as the most competitive mortgage lender at the moment in analysis by Mform mortgage brokers.