HSBC HOLDINGS chief executive officer Stuart Gulliver has said that the bank is “permanently undervalued” by as much as $28 billion (€21.2 billion) due to UK financial regulations introduced after the debt crisis.

The UK banking levy and the Treasury’s demand that banks set aside capital to absorb a loss of as much as 20 per cent of their balance sheets will cost HSBC $700 million and $2.1 billion, respectively, in 2012, the Sunday Telegraph quoted the chief executive as saying. At a price-earnings ratio of 10, that would shave about 17 per cent off the bank’s market capitalisation, Mr Gulliver told the newspaper.

He has asked the Treasury to make the banking levy a windfall tax, which would make it tax-deductible and protect HSBC’s dividend, the newspaper reported.

– (Bloomberg)