HSBC also likes India as a developing nation. In a recent article we wrote about problems in Vietnam, another HSBC favorite. India’s inflation accelerated to a 13-month high. That means India probably will not see an interest rate reduction any time soon. HSBC Group Plc in the past week reversed their earlier forecasts of a reduction in rates by July, betting the central bank will now keep them unchanged at a six- year high. There is no doubt that regulations are a little more relaxed than they are in the UK and US.
Playing hardball in developing nations is not without risk. Advocates and stockholders like Knight Vinke already warned HSBC about the banks failure to cut and run where losses are very high. The problem with developing nations is they are unpredictable, but such is the nature of international banking. we can only hope for the best. What concerns many people, however, is HSBC’s open willingness to export their “Household International” model of predatory lending throughout the world. That is the US government’s label and HSBC’s public statement. We shall see what happens ten years down the road.
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