LONDON — Mark Tucker walked into Monday's meeting with one message for Shell and BP executives: the Middle East peace talks have to work. Or HSBC's $47 billion energy portfolio goes down with the ships.

The warning came during a closed-door session at the bank's Canary Wharf headquarters, according to three sources present. Tucker's blunt assessment marks the first time a major financial institution has directly tied regional warfare to systemic banking risk.

Not market jitters. Structural collapse.

The math is ugly

HSBC holds energy loans worth more than the GDP of Croatia. Nearly 60% depend on companies that need Middle East crude or gas to flow through normal shipping lanes. Iran's naval blockade has already cost the bank $2.1 billion in writedowns since February.

"We're not talking about market volatility anymore," said one senior HSBC executive who attended Monday's session. "This is structural damage to energy infrastructure financing."

The bank's exposure reads like a map of global energy chokepoints. European refineries that can't get crude. Asian LNG terminals sitting empty. Tanker operators burning cash on longer routes around Africa.

Brent crude hit $127 per barrel Monday, up 3.2% from Friday. But Tucker warned the price spikes mask deeper financing problems that won't show up in headlines.

When projects die

Energy companies are defaulting on construction loans built around one assumption: Persian Gulf shipping works. Three major LNG terminals in Bangladesh and Vietnam have gone dark. Their combined financing packages — $8.9 billion — are now in technical default.

"The peace dividend isn't just political," Tucker said, according to a transcript Reuters obtained. "It's mathematical. These supply chains don't work with permanent military risk."

Credit Suisse estimates $340 billion in energy infrastructure loans face similar problems if Middle East shipping stays disrupted through 2027. That's not HSBC's problem alone. That's European banking's problem.

Pension funds and sovereign wealth funds have pulled $23 billion from oil and gas projects since Iran's new Supreme Leader Mojtaba Khamenei took power in March. The money isn't coming back until the guns stop.

Pakistan's economic diplomacy

Foreign Minister Ishaq Dar met with Iranian and Israeli negotiators in Islamabad last week. No breakthrough. But the talks continue, and that's given banks hope that shipping routes could reopen.

Dar's strategy skips territorial disputes entirely. Focus on money instead. Pakistani officials have proposed a $50 billion reconstruction fund for Iranian and Israeli infrastructure damaged in the conflict.

Chinese, European, and Gulf Arab capital would back it. But only if shipping routes reopen first.

"Pakistan is offering everyone a face-saving exit," said one Western diplomat briefed on the talks. "The question is whether pride costs more than money."

The younger Khamenei has shown more flexibility than his late father. He met with Pakistani energy minister Musadik Malik in Tehran last Tuesday. They discussed oil export deals worth $12 billion annually.

But Israeli Prime Minister Benjamin Netanyahu wants Iranian nuclear concessions included in any deal. His office declined comment on the Pakistan initiative.

Thursday's reckoning

HSBC's quarterly earnings will show the full damage. Bank executives expect writedowns exceeding $3 billion — the largest single-quarter loss in the bank's energy portfolio since 2008.

The bank plans to announce a $15 billion credit facility for energy companies hit by Middle East shipping disruptions. But it comes with conditions. Companies must prove they can operate without Persian Gulf transit routes.

That means longer-term shipping contracts around Africa. Or Russian pipelines.

Tucker will testify before the Bank of England's Financial Policy Committee on April 22. His prepared remarks, reviewed by Reuters, warn that energy sector problems could spread to broader credit markets by year-end.

"We're managing systemic risk now," Tucker plans to tell regulators. "Not just portfolio risk."

The clock runs down

The next Pakistan-mediated talks are scheduled for April 28 in Islamabad. Energy ministers from Iran, Israel, and major consuming nations are expected to attend.

For HSBC, timing matters. The bank's energy portfolio faces $8 billion in refinancing deadlines between June and August. Without Middle East shipping normalization, most of those loans will need restructuring.

Or writeoffs.

Tucker's message to Shell and BP was clear: financial pressure is building on all sides. Energy companies can't access capital markets for new projects. Banks can't write off existing loans without triggering broader credit problems.

"Everyone needs this to end," said Maria Santos, energy analyst at Barclays. "The question is whether financial pressure forces political solutions."