Investors in HSBC are bracing themselves for further bad news from the bank in the wake of the first profits warning in its recent history. The group admitted that a rise in the number of bad mortgage debts in its US consumer finance business had taken it by surprise. And the City is worried that this will spread to its credit card business there, leading to a further rise in bad debt provisions.
‘My concern is that credit card defaults in the US will start to rise too and that brings the danger of another increase in bad debts for that,’ said one HSBC investor. He said it was evident there had not been ’sufficient control from the centre. It was going for growth when it should not have been: a classic banker’s mistake.’
Watchdog organization Household - HSBC Watch said there were problems long before HSBC bought Household International and HSBC never tightened lax standards after buying Household, thus HSBC investors are rightfully concerned. “If bad debts don’t get them a huge lawsuit will” said the group.
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