HSBC warns of debt collapse

The chairman of HSBC, the UK’s largest bank, has warned the excessive
leverage underpinning so many deals could ‘end in tears’ if a major deal

In an interview with the FT Stephen Green said he was ‘worried by the degree
of debt in some big ticket transactions nowadays’ and that something was going
‘end in tears’.

Green’s comments follow similar warnings from 3i head
Philip Yea and Alchemy Partners boss Jon Moulton
, and come as private equity
faces intense scrutiny from unions and MPs over the use of debt to fund

Green also warned that in the event of a collapse, a corporate recovery would
be very difficult because risk had been parcelled out to so many parties.

He did say, however, that a single major insolvency was ‘unlikely’ to
question ‘the solvency of one particular institution or even the viability of
the whole system’.

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