HSBC Says U.K. Wholesale Banks May Be Harmed by Firewalls

HSBC Holdings Plc said U.K. plans to force lenders to separate their consumer operations may put banks with securities arms at a disadvantage, leaving client companies increasingly dependent on financial institutions based outside the country.

The proposals by the Independent Commission on Banking will make so-called wholesale banks smaller, with more volatile cash flow and lower credit ratings, the London-based lender said in a written submission to the Parliamentary Commission on Banking Standards. Banks will also be forced to hold more capital than international competitors without being able to draw on consumer deposits as a source of funding, said HSBC, Europe’s largest bank by market value.