While HSBC was profitable around the world the money was poured down the drain marked “Household International / HSBC Finance” in the United States. HSBC wanted to guarantee Household’s debt. HSBC’s superior credit rating would cut the cost of Household’s debt, with a dramatic impact on margins, or so it was thought.
Here is what you may not know about Household International and HSBC Finance:
The Hong Kong Monetary Authority, where HSBC is effectively the central bank, saw the risks and barred HSBC from formally guaranteeing the Household debt. The U.S. Federal Reserve concurred.
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