HSBC-between hard and rock place

HSBC is now in a very difficult situation in face of its capital requirement. The passive and silence of capital raising rumors for almost a month have done nothing good to HSBC and its share price. There are not many choices left on the table that can be considered. They could either have to raise capital at the current reluctant share price at HKD60 or to sell its Assets. If to sell US assets is not possible due to technicalities in terms of markets and buyers, then to kill chickens that could lay the golden eggs seems to be inevitable. If to step into the shoes of the Management of HSBC, I would suggest the strategies either to sell part of the stakes in Bank of Communication or Hang Seng Bank. If to choose between these two banks, I think Hang Seng Bank is far better to sell than the Bank of Communications given the current banking environment for running business in Hong Kong is not good at all. To make decent profit is not something easy. After all, there is no need to have two big banks competing side by side in such a small economy like Hong Kong. If to sell partly of Hang Seng Bank, it is going to be a big relief to HSBC since its 62.14% stakes in Hang Seng Bank could raise funds up to US13.4 bio that could bring their capital ratio up to a more comfortable level. Though it is not a direct right issue or share placement, the effect on the capital ratio is not something direct, certainly it is a big help to the bank. For the Bank of Communications, the China Market is too huge to miss and if to find another Bank like this as strategic partner in future is almost impossible. So, for strategic management, to sell Hang Seng Bank should be on the top of the list unless there are some other chickens that we have missed inside the Bank.