Iain Mackay, the CFO of HSBC North America Holdings, revealed some insight in to HSBC’s plans, as only a chief financial officer can. The CFO and other top executives are planning to slash the finance company’s home-mortgage business by as much as 70 percent by the end of 2008, and to cut branches where home loans are originated in half compared to 2006. In a recent interview on CFO.com Mackay said “The volumes that we are underwriting within our consumer finance business are in the region of 60 to 70 percent smaller than those compatible volumes of a year ago.” In other words, rather than generating contracts with little or no regard for the quality of those contracts, HSBC Finance is positioning itself.
MacKay went on to say “(In late 2006) the balance sheet of the finance company totaled about $180 billion. And of that, real estate secured was a shade underneath $100 billion. Substantially all of the real estate secured assets are near or subprime assets. As of the second quarter of this year, the real estate secured was about $80 billion, all near or subprime. Of that, about $30 billion [stemmed from] the old broker correspondent channel originations and $50 billion [from] the retail consumer-lending branch network, which at the end of 2006 consisted of 1400 branches is now 750 branches. By the end of the year we’ll have just over 700 branches.”
Props to David Katz and CFO.com
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