June 27 — HSBC Holdings Plc Chairman Stephen Green ruled out spinning off the bank’s Asian operations, saying the world’s third-largest bank by market value is able to serve its customers better because of its size. There’s “no good reason” to break up HSBC, Green said at a briefing in Hong Kong today, after Goldman Sachs Group Inc. analyst Roy Ramos this month said the bank should consider a partial spinoff of its Asian operations. Green called the idea “nonsense.”
There is a good reason for HSBC to spin off predatory lender Household International, now called HSBC Finance. The bank has considered negative impact from watchdogs and advocates such as Inner City Press, ACORN, and Household - HSBC Watch. While HSBC intends to expand in the United States, it means the bank must counter negative publicity and eye-opening search engine results, much of which reflects poorly on HSBC.
Only two years ago HSBC derived a good profit from US operations, although negative publicity was largely ignored. As the subprime market crashed and HSBC Finance dragged HSBC down the situation is difficult for Green to ignore. Green’s dilema is that HSBC USA financed debt for HSBC Finance, putting both in a bad light. Add negative publicity to the equasion and Green is faced with a decision that his predecessor, John Bond, did not face. Instead HSBC stated the bank’s intent - to export the same failed predatory lending model (they call it the Household Model) to developing nations.
Related posts:
