More than £16 billion was wiped off the value of Britain’s largest listed banks after HSBC announced plans to deepen its focus on Asia and Lloyds Banking Group issued a fresh warning over potential costs tied to the UK’s car finance scandal.
The FTSE 100 slipped 0.3% in early trading, led lower by a sharp fall in financial stocks. HSBC, the index’s second-largest constituent, was the biggest decliner after revealing plans to take its Hong Kong-listed subsidiary Hang Seng Bank private in a deal worth HK$290 billion (£27.9 billion).
To fund the acquisition, HSBC said it would pause share buybacks for the next three quarters, boosting cash reserves ahead of the deal’s expected completion in the first half of 2026. Its shares plunged as much as 7.1%, erasing nearly £13 billion from its market value.
The wider banking sector was further pressured by Lloyds, which said it may need to increase provisions beyond the £1.2 billion already set aside for motor finance mis-selling compensation, warning the additional amount “may be material.”
Lloyds shares dropped 3.9%, while NatWest also declined by nearly 1%, extending losses across the UK’s financial sector.
