HSBC Uses Fuzzy Accounting To Show Gain From Building Sale Failure

From our friend Craig M.: "HSBC appears to be booking an asset at 1.09 billion whose true market value is only 838 million GBP along with a 250 million GBP "gain". Charles Ponzi would approve of the accounting."

HSBC Holdings Plc, Europe’s biggest bank, said it will post a 250 million-pound ($368 million) gain by resuming ownership of its headquarters in London’s Canary Wharf from Spain’s Metrovacesa SA, 20 months after selling the building.

HSBC’s property unit will buy the building for 838 million pounds, subject to various retentions and warranties, it said in a statement today. The HSBC bridging loan which first enabled Metrovacesa to buy the building “will be extinguished,” it said. The London-based lender sold the tower in April 2007 for 1.09 billion pounds, setting a record as the city’s most expensive single property transaction.

The sneaky part is that just because Metrovacesa has a 250M pound loss, doesn't mean that is automatically HSBC's gain. The value has just evaporated as real estate has fallen. Whatever gain HSBC might have had on the sale should have been shown well over a year ago -- if they are attempting to do it again, it is double-counting.