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)
Even now - a full seven years later, one person currently employed by HSBC in the United States said “I dont know how they (HSBC) get away with the way they operate. I work in credit card collections.”
Outside HSBC analysts at Hemscott say “While we like this strategy, as we think it plays to HSBC’s strengths, we also see it as risky–deeper-than-expected slowdowns in these regions could leave HSBC with an even bigger mess on its hands.”
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