HSBC Holdings Plc of the UK, Europe''s biggest bank, is closing its US sub-prime
mortgage unit Decision One Mortgage after taking a $945 million charge and loan
Finance, the US consumer finance arm of HSBC, said the business is no longer sustainable
and it is cutting 750 jobs at Fort Mill, South Carolina, Phoenix, Arizona and
Charlotte, North Carolina.
no longer sustainable and not the right place to allocate capital in the future,"
HSBC Holdings Group chief executive Michael Geoghegan said in a statement.
Finance said it would take a charge of about $880 million on Decision One''s bad
assets and about $65 million in after-tax charges for restructuring, including
retrenchments and facility closures.
bad debts stood at $6.35 billion in the first half of the year, up 63 per cent
from $3.89 billion in the same period last year.
said it would stop making subrpime mortgages through brokers in the US, as it
continues to clean up its home-lending business. HSBC Finance will focus on lending
directly to consumers.
acquired Decision One in 2003 for $14 billion. Decision One is a small part of
HSBC''s US operations, which include auto finance and credit cards.
the world''s fourth biggest bank is also under pressure from activist investors
to shake up its corporate governance. HSBC, with a market value of more than $200
billion, has been criticised for the underperformance of its shares in the last
five years and its purchase of Household, which has exposed it to the US sub-prime
US mortgage lenders have closed down or filed for bankruptcy protection following
the sub-prime meltdown. Nearly 90,000 jobs have also been lost in the crisis that
affected the US housing industry.