Financial Services : Hsbc Bank

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HSBC Model
2009 October 9, a conference hosted by UK Financial Services Authority referred to the liquidity management in HSBC Bank, seen from the statistics of annual report of HSBC, this bank did not suffer a great impact of 2008 financial crisis. Analysts focus on the efficiency of HCBS model, make some general experiences that banks can learn from the HSBC bank (Choudhry, Landuyt 2010). In fact, the HSBC model did not was a very specific model to rescue the bank in liquidity management risks, it consists some very basic principles in banking and liquidity risk management. It is a more robust risk management method so that banks may back to a more conservative business model, whether it is the bank’s own choice or the central bank’s regulation. There are 9 general principles to apply in the liquidity management and banking system.
1. Make core customers’ deposit to invest in illiquidity assets, this action can lower the risk of withdraw in an economic stagnation or even recession period, also more stable than waiting the wholesale funds to be paid.
2. If the deposits of core customers are not sufficient, banks can use long term loans to invest the illiquidity assets, but notes there, only the long term loans that more than one year to the maturity. It can effectively decrease the rollover liquidity risk in the financial crisis.
3. Banks should not rely heavily upon wholesale funding, the funds used in wholesale funding should be as much as the funds of long term (five
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