HSBC opts out of Britain's pandemic loan collection plan

By Iain Withers

LONDON, Feb 5 (Reuters) - HSBC has opted out of an
industry-wide plan for collecting unpaid emergency COVID-19
business loans, in a blow to efforts by other banks to team up
to limit any reputational damage if firms struggling to repay
are treated unfairly.

Reuters reported in December that only 10 of 23 lenders that
have granted 'bounce back' loans (BBLs) had at the time joined
the body, with most smaller ones opting out believing it did not
offer value for money.

HSBC told industry body UK Finance, which is
setting up the central body, this week that it would not be
joining, a source with knowledge of the matter told Reuters,
after a decision by senior HSBC managers in recent weeks.

Major banks have been toiling for months to set up a
co-ordinated system for collecting unpaid BBLs, once the 45
billion pounds ($62 billion) of state-backed funds granted to
small businesses with limited checks come up for repayment from
May.

Lenders including NatWest and Lloyds have
argued for a consistent approach to help cope with defaults and
avoid a re-run of past mistreatment scandals that caused deep
reputational damage and mistrust after the financial crisis.

The source said HSBC had decided to set up its own system as
it wanted to closely manage any commercial and reputational
risks in-house rather than fully outsource the work.

The bank had not ruled out joining at a later point but was
highly unlikely to before launch, the source said.

"We always strive to ensure fair and consistent outcomes for
our customers and will adhere to the principles set out by HMT
by developing our own recoveries process. We remain in dialogue
with UK Finance, BBB, HMT and other lenders," an HSBC UK
spokesman said.

UK Finance was not immediately available for comment.
($1 = 0.7304 pounds)
(Reporting by Iain Withers;
Editing by Alexander Smith)