HSBC - Renegotiating Loan

socrates

I have just returned from a short break to find a lovely letter from HSBC

Dear Mr.....

We need to draw attention to Clause 5 of the loan facility letters headed 'Renegotiation' which provides the opportunity to negotiate the terms of the loan every 5 years.

The loans were drawn down 18.12.2007 and as a relevant anniversary is approaching, please accept this letter as notice that the bank wishes to invoke the clause.

Since the loans were first made available our regulator, the FSA has imposed increased capital requirements upon banks in general but specifically as regards lending in respect of investment property, and this incurs an increased cost to the bank.

As a result, and as provided for by the Renegotiation clause, and also Clause 8 headed 'Increased Costs' HSBC is now seeking a 3.25% increase in the interest margin on the loans.

This proposed rate increase will see the margin move from the present 1.5% above the Base Rate to 4.75% for each loan respectively from the anniversary date

Should this be acceptable, I attach side letters for acceptance and return please.

Should you wish to discuss please call me...

I am obliged to bring to your attention that in accordance with Clause 5, upon failure to conclude agreement by the relevant anniversary, Clause 9 'Termination' will come into effect, meaning, inter alia, that the loans will become repayable on demand.

Yours sincerely .......

There you have it

HSBC 'cherry picking' and raising money to pay for their misdemeanours in Mexico etc.

To be honest I never really read the agreements because as far as I was concerned as long as I had the correct deposits - my agreed rate for Commercial Loans was 1.5% above base and has been so for the last 15 years

Naturally things have changed over the last few years

Any suggestions on my approach - needless to say the rate is unreasonable and moving the loans elsewhere is an option but will be costly (and they know it)

Thanks in advance

kingstreet

If the terms they refer to are what you accepted at the outset, moving elsewhere appears your only option.

Check your original agreements.

betmunch

socrates wrote: »

Should this be acceptable, I attach side letters for acceptance and return please.

I may be being nieve, but how about write back saying:

Thank you very much for you letter dated xx/xx/xx, unfortunately these terms are not acceptable to me.

If you want to be really cheeky put in that you are looking to lower your costs an therefore under the renegotiation clause in the contract you wish to have the interest rate lowered to base rate plus 0%

Would be good if they really did renegotiate rather than just change what they want!

socrates

betmunch wrote: »

I may be being nieve, but how about write back saying:

Thank you very much for you letter dated xx/xx/xx, unfortunately these terms are not acceptable to me.

If you want to be really cheeky put in that you are looking to lower your costs an therefore under the renegotiation clause in the contract you wish to have the interest rate lowered to base rate plus 0%

Would be good if they really did renegotiate rather than just change what they want!

My Broker advised me to contact them and say that the rate and time limit are both unacceptable -

suggest a rate of 3.5%

if they do not agree tell them you want it looked into by the FSA - especially as they are using them as one of the reasons for the increase

He feels I would lose the case but the hassle might make them negotiate

GlamGirlie

socrates wrote: »

My Broker advised me to contact them and say that the rate and time limit are both unacceptable -

suggest a rate of 3.5%

if they do not agree tell them you want it looked into by the FSA - especially as they are using them as one of the reasons for the increase

He feels I would lose the case but the hassle might make them negotiate

FSA won't be interested at all, it's a renegotiation clause which you clearly agreed to by signing the original loan agreement.

You can ask HSBC for a lower rate than that which they are proposing, you could justify your request by demonstrating the higher rate would be unaffordable, but at the end of the day if you won't like what they are offering, take your business elsewhere - if you can find a lender that will offer you what you want, that is.

Thrugelmir

socrates wrote: »

He feels I would lose the case but the hassle might make them negotiate

You've been given the alternatives. So the hassle is all yours.

Thrugelmir

socrates wrote: »

HSBC 'cherry picking' and raising money to pay for their misdemeanours in Mexico etc.

Mexico will be a separate subsidiary.

UK will be self financing.

Clues in the name "H and S". Only reason head office came to UK was when HSBC bought Midland Bank. So for all and intents and purposes isn't really a UK bank.

socrates

Having looked back over my paperwork - the previous agreement to this one was not for 5 years it was actually for the term of the loan which at the time was for 20 years

This particular loan was in order to further develop the property and create another residential unit - so I drew down some money and their suggestion was to split the loan into two - one for the new and one for the old residential unit

Had I known (or bothered to look) they were basing it on 5 years I would never have signed or agreed to these terms - I had plenty of business with them and at the time had the power to make demands or move my business elsewhere

Anyway - it seems I will have to try to negotiate with them next week - I do not expect to get what I want...

maninthestreet

socrates wrote: »

I am obliged to bring to your attention that in accordance with Clause 5, upon failure to conclude agreement by the relevant anniversary, Clause 9 'Termination' will come into effect, meaning, inter alia, that the moans will become repayable on demand.

:eek: :eek: :eek:

socrates

maninthestreet wrote: »

:eek: :eek: :eek:

Thanks for pointing that out

_Andy_

maninthestreet wrote: »

:eek: :eek: :eek:

Oh, er, about 11 sir.