Late sunday night we started receiving reports from overseas, many of which predicted what might happen Monday morning. Over the past few years we talked with one reporter who’s opinion we value. Carrick Mollenkamp of the Wall Street Journal was the reporter we followed late Sunday night.
One year ago the world expected HSBC to announce U.S. losses, offset by profits made elsewhere around the world. Reports leaked ahead of time were accurate. This year leaks were not evident, nor could they be confirmed.
We did receive reports like this one:
HSBC PLC plans to scale back its consumer lending operations in the United States and to close hundreds of branches there, British and U.S. newspapers reported Sunday. The newspapers cited unidentified sources, which they said were familiar with the plans. They said HSBC will stop providing personal loans in the U.S. and wind down operations of the subprime lender Household International Inc., which it acquired in 2003.
By 9 PM Sunday night (in the United States) our visitor traffic increased tremendously. We knew what people were looking for, but we could not provide 100 percent confirmation at that time. To speculate would have upset too many people, so we were quiet. After two hours of sleep, we received confirmation about the same time as everyone else. By then all major networks carried the news, and employees still tried to go to work on the East Coast early Monday morning.
The Wall Street Journal reported that HSBC planned to close 800 branches that previously traded as Household International. Respecting Carrick Mollenkamp’s professionalism we did not expect, nor did we receive advance notification of HSBC’s plans. Mollenkamp covers European banking and finance from London.
Reporters expected HSBC to announce full-year earnings late in Monday in London. That is how HSBC did it in previous years. An early morning announcement surprised many. HSBC stock is down 19 percent late on Monday afternoon in New York, trading at $28.20, after closing around $35 on Friday.
Rumors about Wells Fargo’s possible purchase of HSBC Finance, or HFC and Beneficial offices providing prime loans, never materialized. While it is easy to look at the situation using hindsight, one can clearly see that HSBC Plc had no clear plan for turning around HSBC Finance operations.
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