Barclays, RBS in debt double whammy

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Oct 8: HSBC Holdings Plc, Royal Bank of Scotland Group Plc and the biggest UK banks face the most debt coming due in at least 10 years as the credit market seizure raises borrowing costs to the highest on record.

The six largest British banks have 54 billion pounds ($95 billion) of debt to refinance by April, triple the amount of the year-ago period, according to data compiled by Bloomberg. HSBC, the U.K.’s biggest bank, and RBS each have about 11.5 billion pounds of debt due, while Barclays Plc has 15.9 billion pounds maturing, the data show.

Financing costs are soaring as banks hoard cash after the credit crunch triggered by the US subprime mortgage crisis a year ago. The three-month London interbank offered rate in dollars rose to 4.52% from 2.64% in March, while the equivalent rate for euros increased to a record 5.39%, from 4.74% six months ago. “The banks have no idea how they are going to manage rolling over their debt,” Kornelius Purps, a Munich-based bond strategist at UniCredit SpA, said before Wednesday’s coordinated interest-rate cuts. “The central banks will have to intervene.”

The Bank of England was among central banks to lower rates today in a worldwide action to stave off a recession. Bank borrowing costs rose this month even as the UK announced a cash injection to the banking system, Europe’s policy makers provided emergency funding and US President George W Bush approved a $700 billion rescue plan. Prime Minister Gordon Brown’s government will invest about 50 billion pounds in the UK’s banks, the Treasury said.

HSBC and Standard Chartered Plc said they have no current plans to take government capital to bolster their reserves.

RBS and Barclays will be taking up aspects of the plan, they said in statements. Lloyds TSB Group Plc, which has about 512 million pounds of bonds to refinance by the end of March, said it will make a futher announcement about the plan “in due course.”

Banks need more capital after the worst US housing slump since the great depression and $593 billion in worldwide losses and writedowns caused their stocks to tumble, forced Lehman Brothers Holdings Inc into bankruptcy and pushed the UK government to nationalise Bradford & Bingley Plc.

The UK bank debt includes bonds, commercial paper and equity-linked notes and compares with 18 billion pounds repaid in the year-earlier period.