As I was running down some facts presented in this thread
that is about an HSBC
whistleblower bringing to light ‘ghost accounts’ that appear to be nothing more than tools to launder dirty money, I stumbled across something
that has had me flummoxed ever since I read it last night. Literally, it had me completely stumped.
In a Reuters article that I found in my research of the above mentioned thread topic, it states:
HSBC has 62 branches in the four Latin American countries it is leaving - 24 in Peru, 20 in Colombia, 11 in Uruguay and seven in Paraguay -
out of more than 3,000 across the Americas.
As of December 2011, the four operations for sale had assets worth $4.4 billion, HSBC said.
Compare that to what HSBC has agreed to sell it for:
Reuters Sourced Article: "HSBC to Sell Assets in
South America for $400 Million"
HSBC Holdings PLC (HSBA.L) said on Friday that it had agreed to sell its operations in Colombia, Uruguay, Peru and Paraguay for $400 million
in cash to Banco GNB Sudameris.
Did you catch that? Worth $4.4B…. selling for $400M. This is what totally had me stumped, to the point where I just could not get my head around
it. On the surface it looks like the deal of the century or a trunk sale at Filene’s Bargain Basement.
The concept that one of the world’s largest banks would be willing to take such a loss was beyond my limited comprehension…until Maxmars lifted me
up beyond the tree line so I could see the rest of the forest. (Thank you very much Maxmars!)
What we see here is fractional reserve banking at its finest in my opinion. I don’t pretend to know all the ins and outs of just how fractional
reserve banking works, but I would assume that the $400M agreed price would be the amount that would cover the actual physical fluid cash that HSBC
has in these 62 banks. Ok, if that is the case, I can understand that at least. But, if you were sitting on $4.4B in assets, would you be willing to
only take $400M in exchange for that? I would think that they would want a little more profit out of the deal. But that’s just me. Could it be
that HSBC has suddenly grown a heart a la Grinch style? No, I think not. Even I cannot live and play in that fantasy land.
Taking the basic principles of re-investment activity in the practice of Fractional Reserve Banking, let’s play devil’s advocate here for a minute
and sneak a peek behind the curtain to what I see as a possibility of what is happening here. Consider these points:
- The financial firm that HSBC has agreed to sell these 62 branches to is a family owned outfit that has been in operation for many many years in
- Columbia is not exactly known as a country that deals harshly with its drug cartels. *wink wink*
- Drug cartels bring in big money
- Fractional Reserve Banking allows for banks to invest in other banks, boosting the 2nd bank’s ability to invest more, thereby increasing their
profit as well as increasing the profit margin for the investing bank.
- Banco GNB Sudameris, the purchasers of the HSBC branches in the 4 Latin American countries mentioned, being in located Columbia, I’m sure has more
than their fair share of drug cartel accounts on their books. (I don’t think that is a farfetched statement, even for no proof in the form of a
- HSBC and Banco GBN Sudameris enter talks outlining the deal. HSBC agrees to sell for the $400M in liquid cash they have in those banks (if that is
the case) in exchange for being able to dump investments back into Banco GNB Sudameris through HSBC’s own ghost accounts still reaping the benefit
in interest paid on drug cartel money.
- HSBC’s own drug cartel accounts in these 4 Latin American branches then become property of Banco GNB, because come on let’s face it, it’s
plain naïve to think HSBC does not have their fair share of drug cartel laundering accounts in these countries as well.
- This frees HSBC from any responsibility should these accounts come under scrutiny and investigated for laundering dirty money.
- This also puts all the responsibility on Banco GNB who I am sure knows just who to pay off should these accounts be exposed. It’s their backyard
so to speak, I’m sure they have ‘connections’ to make it all go away.
- Since what I see as the very real possibility that HSBC would then turn around and dump investment money back into Banco GNB by way of ghost
accounts, I’m sure it will be no time at all before the difference between the $400M sale price and the $4.4B actual value will be realized and if
HSBC plays their cards right, not only will the difference be realized, mega profits would soon follow. Not a bad haul for doing virtually nothing at
all to get those profits, huh?
I could be totally off the mark here and I probably am. It’s just an interesting mental exercise in the ongoing nonsense our banks are engaged in
So, because I know there are far more intelligent financially minded here on ATS, far and above my own knowlwdge in this area, what is your take on
all of this? Your comments, ideas and thoughts are greatly appreciated.
Additional source for information on this topic and the movements HSBC is making or attempting to make around the world:
NewsNow.co.uk - HSBC Articles