Household HSBC Watch

Analysts at Household - HSBC Watch predicted credit card problems at HSBC Finance. Today Moody’s announced what we suspected. HSBC Finance, formerly Household International, is now having problems with credit card defaults. Moody’s Investors Service on Tuesday changed its outlook on HSBC Bank USA, part of HSBC Holdings Plc, to negative from stable, saying the bank’s U.S. operations are likely to face financial pressures for the foreseeable future. “HSBC USA made increased provisions for credit losses in the third quarter of 2007, largely driven by its credit card portfolio,” Moody’s said in a statement. “Moody’s expects that credit costs will remain elevated over the coming year.”

What this means is that HSBC Finance, which operates the credit card business, is proving hard to justify. The division’s subprime problems are now common knowledge. The depth of credit card and subprime problems remains to be seen. In late November Stephen Green, Chairman of HSBC, admitted that Household had been an essentially disastrous acquisition.