Bank of England losses & HSBC profits: Positive Money response

London, 30 April 2024 – Positive Money responds to HSBC’s announcement that it’s pre-tax profits for Q1 2024 were £10.1 billion, and the Bank of England’s forecast that it will make cumulative losses of around £125 billion by the end of the decade through its management of the Asset Purchase Facility, a cost borne by the Treasury.

Fran Boait, co-executive director at Positive Money, said:

“It’s no coincidence that the UK’s largest private bank announced billions in profit on the same day the Bank of England continues to forecast losses of billions due to higher interest rates. 

“The UK is unique in the way the Treasury covers the central bank’s losses from its quantitative easing program, meaning the public is ultimately bearing the cost of a program that stimulated stock prices rather than increasing household spending power after the financial crash.   

“There are a number of ways the public could claw back billions of pounds in subsidies that are boosting bank profits, ranging from the windfall taxes and ‘tiered reserves’ adopted across Europe, to the introduction of a digital pound.”

Notes:

• HSBC’s profit announcement can be found here: https://www.hsbc.com/news-and-views/news/media-releases/2024/hsbc-holdings-plc-1q-2024-earnings-release 

• The Bank of England’s Asset Purchase Facility Quarterly report: Q1 2024 can be found here: https://www.bankofengland.co.uk/asset-purchase-facility/2024/2024-q1

• Positive Money’s latest paper, ‘The fiscal benefits of a digital pound’ (April 2024) finds that £30 billion for the Treasury every year could come from the issuance of a digital pound: https://positivemoney.org/publications/fiscal-benefits-digital-pound/ 

• The Bank of England’s working paper ‘Central bank profit distribution and recapitalisation’ (April 2024) suggests the UK is the only rich country where losses are passed onto the Treasury: https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2024/central-bank-profit-distribution-and-recapitalisation.pdf 

• Positive Money found that a windfall tax on the profits of the big four banks could raise between £3.5 and £14 billion (Feb 2024): https://positivemoney.org/2024/02/taxing-banks-record-profits-could-raise-14bn-for-public-services/ 

• In March, Gordon Brown called for ‘tiered reserves’ to reduce the amount of interest the Bank of England pays banks on their reserves: https://www.itv.com/news/2024-03-27/gordon-brown-says-the-government-can-raise-billions-of-pounds-from-banks