HSBC announced a $607m (£351m) deal in Indonesia yesterday which allows Britain's largest bank to double its presence in the world's fourth-most popu

HSBC announced a $607m (£351m) deal in Indonesia yesterday which allows Britain's largest bank to double its presence in the world's fourth-most populous nation.
The arrangement to buy an 88.9% stake in Bank Ekonomi follows frenzied speculation that HSBC would buy a troubled investment bank or bail out one of Britain's banks. Instead, it defied the rumours and stuck to its preference of making acquisitions in emerging markets. It is able to fund the deal from its own resources.
The transaction is the latest illustration of the banks' divergent approaches to dealing with a crisis that has forced Lloyds TSB, HBOS and Royal Bank of Scotland to raise capital from the government. Barclays, however, has bought the Wall Street businesses of collapsed Lehman Brothers in a signal it is determined to expand in the face of market adversity. Alex Potter, banking analyst at Collins Stewart, believes three strategic strands are developing. The first is the move by strong banks such as HSBC and French bank BNP Paribas to conduct deals in the mayhem. BNP Paribas is now the largest retail bank in Europe after buying assets from the distressed Dutch-Belgian combine Fortis.The second are those banks hunkering down for the financial crisis by taking government support and the third are the "select few that fall between the two - which externally look weak but have internal confidence", said Potter. Barclays, which has avoided the government-backed bail-out of the banking sector by promising to raise funds in the private sector, falls into this category.Sandy Flockhart, chief executive of HSBC in Asia, stressed HSBC was not moving to buy distressed assets. "This is not a bust bank or a bank with problems behind it. It's a conservative, well-managed bank and in view of that it should be easier to take it through to the next stage," said Flockhart.

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