HSBC Offers $5 Billion In Additional Funds To Small Businesses

December 7, 2008 1:50 p.m. EST

London, UK (AHN) - HSBC Holdings PLC (NYSE: HBC), which got 26 percent of its 2007 revenue in North America, announced on Sunday that it has created a new $5 billion global working capital fund to support small and medium-sized businesses.

"This is a difficult time for business in many economies. Customers are rightly looking to see how banks can help," HSBC Chief Executive Officer Michael Geoghegan said in the statement.

"SMEs [small and medium-sized businesses] are the lifeblood of most economies and it is their success that will create economic growth," he added.

The fund for lending to small and medium-sized businesses will also include 1 billion poinds ($1.5 billion) earmarked for U.K. companies, the London-based financial firm said in a statement on Sunday.

HSBC, which will provide the funds from its own resources, said the capital will ensure that the companies continue to have access to credit through the current financial and economic crisis.

"The fund will supply working capital to help businesses with their cash flow needs and support businesses that trade or aspire to trade internationally," the company said in the statement.

"It will help customers with fundamentally sound businesses weather short-term shocks caused by the downturn."

Prime Minister Gordon Brown's administration has been pressing the financial firms to improve lending capacity for small businesses and individuals to receive bailout from the 400 billion pounds rescue plan unveiled in October.

The country has experienced consistent slowdown in its economy, pushing it down in to recession. The step by HSBC was welcomed by the UK's Business Secretary Peter Mandelson and called upon other firms to follow its measures.

"We welcome this support providing additional funds for SMEs, and would also urge all banks to maintain charges and rates alongside offering good communications with their small business customers," Mandelson was quoted saying by BBC.

HSBC said Sunday that the capital is over and above what the financial firm would normally expect to lend in the current business environment, "and will be funded from HSBC's own resources."