Today Hemscott said, in part: “HSBC’s recent stumble with Household, which suffered deep losses in the U.S. mortgage crisis and was shuttered in 2009, demonstrates the inherent difficulty in managing disparate operations. When HSBC acquired Household in 2002, it trumpeted the firm’s risk-modelling systems, which it anticipated would enable it to judge the riskiness of loans more accurately than competitors could. As it turned out, HSBC placed too much faith in its newly acquired expertise and failed to adequately supervise its U.S. managers. It has since admitted that the acquisition was a mistake–and a very costly one at that.” (see full article here)

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Business Standard says there is an “inevitable eastward shift in HSBC’s business. The bank has already issued a renminbi-denominated bond, and has applied for a listing in Shanghai in an attempt to appear more local. As income, assets and the investor base become more Asian, more of the senior team will be packing their trunks.”

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Will HSBC’s focus on emerging markets come at the cost of markets ruined by subprime and predatory lending? The answer remains to be seen but HSBC wants to expand in the U.S.. Said another way, HSBC wants deposits from anywhere.

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It was 2003 as HSBC talked about experting the “Household Model” of predatory lending to other countries. Even through early 2006 the Household Model seemed like a rosy idea to HSBC. By 2007 it was a horribly different story. But securitizing debts in countries other than the US and UK may soon be on the table once again.

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