HSBC Bermuda CEO Richard Moseley says his bank is flush with capital and keen to lend — but it has tightened lending standards in recent years to avoid making the same mistakes the industry made in the pre-crisis period.

In his Budget statement last month, Finance Minister Bob Richards said local banks’ ultra-cautious lending policies were “at odds with Bermuda’s national economic interests”, claimed banks had “no appetite for lending” and “to top it off, banks continue to lay off Bermudian staff”.

In an interview with The Royal Gazette, Mr Moseley said: “We always have an open dialogue with the Finance Ministry and we’re always looking at ways we can work together to make Bermuda more successful.

“We also are very conscious that we are long on liquidity so we’re keen to lend. We’re long on capital so we’re keen to lend. We have a lot of well trained staff who are keen to lend.

“What we don’t want to do is to lend and then for customers to regret it down the road. We’ve seen that too often. So what we’re looking for is well structured business plans so the overall risk-reward is right for both parties.

“Our issue is not lack of supply of bank finance — it’s very much lack of demand.”

The public-private partnerships that Mr Richards would like to use for infrastructure projects, involving a business plan with future revenue streams, could be a good example of the right risk-reward balance, he added.

“We want to play our part, we want to lend when we can, but we don’t want to do something that will damage the strength of the banking sector going forward, because we’ve seen the problems with that elsewhere in the world,” Mr Moseley said. “The banks need to make an acceptable return on equity through the cycle and that means being responsive and not jumping excessively quickly and causing long-term damage.”

Mr Moseley said lending standards were returning to historical norms, rather than being draconian.

“I many countries, years ago you had to save that 20 to 30 percent deposit, or you’d have no flexibility,” he said.

“I don’t think that we are now excessively conservative — I just think that in the 2000s, we had a more relaxed credit criteria. And I think we can all see the consequences of going down that route, so let’s avoid doing it a second time.”

HSBC Bermuda requires borrowers to put down a 20 percent deposit.

On Mr Richards’ criticism about layoffs, Mr Moseley said every business has got to consider its stakeholders, including customers wanting efficiently provided services and shareholders wanting a viable business. If revenues were not growing then businesses had to look at costs.

“Our customers have had to make changes,” Mr Moseley said. “I was talking to somebody who used to have six people working for him. He now has three people. Why’s he done that? Because he wants to stay in business.”

He said HSBC Bermuda now employs more than 600 people and made the point that a decade ago, it employed around 250 work permit holders — now there were 50.

“We have successfully grown the capabilities of our Bermudians to take more of those jobs,” he said. “That’s a win-win. If we can build a strong cadre of Bermudians, through training and opportunities overseas, then that will make Bermuda more fit for purpose. Our investment in talent is significant.”