Household HSBC Watch

In a presentation to analysts by Stephen Green, Chairman of HSBC, for the first time Green admitted that Household had been an essentially disastrous acquisition, that not all other diversifications had been successful, and that total shareholder return had underperformed peers. Household International is now called HSBC Finance, and HSBC previously said it would keep the HFC and Beneficial Finance brands. Now HSBC is rethinking that logic. HSBC Finance also has credit card operations, and owned now-defunct Decision One Mortgage.

Mr Green offered little of new importance other than to say HSBC would get out of markets where it didn’t have a competitive advantage. He offered no news about ongoing cutbacks at HFC and Benefical branches in the United States. Finally admitting that Household International had been a disasterous acquisition may have been a concession to activist Knight-Vinke. Reports from U.S. activist Household - HSBC Watch, published from 2003 through the present, appear to support Green’s conclusion.

HSBC, which paid $15.5 billion for Household International Inc. in 2003 to become one of the largest U.S. subprime lenders, has since ousted managers, closed mortgage units and stopped trading and selling mortgage-backed securities.