HSBC exhausts leverage headroom in Fed stress tests

Goldman Sachs worst performer among US banks

A severe recession would deplete the leverage headroom of HSBC’s US intermediate holding company (IHC), leaving it with no extra buffer on top of the regulatory minimum, the latest Federal Reserve stress test shows.

HSBC North America’s Tier 1 leverage ratio was forecast to fall as low as 4% over a three-year severe economic downturn from a starting point of 9.7% at end-2021, a close-call that could lead to restrictions on dividends. The ratio was projected to recover to 8.5% by the Q4 2024 end

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