HSBC is reviewing the future of its HFC consumer finance business in the US after losing $40bn on American mortgage and credit card writedowns since 2006, according to the Guardian. The amount is slightly higher than what we have tracked so far. HSBC has been pretty quiet about the details. A restructuring is in progress.
Informally, the bank is looking at several plans that could involve: spinning off HFC into a new arm’s-length company that would blunt the impact of future losses; aggressively running off much of the business; a possible sale in three years when, it is hoped, the housing market recovers; a debt-for-equity swap with HFC bondholders. Broker Collins Stewart reckons that HFC could break even by 2011 and that losses will taper off in 2010.
‘It is a drain on the group’s resources, and should be jettisoned,’ says one City investor who supports a campaign being waged by Knight Vinke, the shareholder activist group that has accused HSBC of strategic and corporate governance failings. The bank denies the charges.
Here is the entire article.
Related posts:
