HSBC to close US mortgage lending unit Decision One

22 September 2007

Mumbai: 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 write-downs.

HSBC 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.

"It''s 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.

HSBC 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.

HSBC''s 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.

HSBC 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.