Household HSBC Watch

Neiman Marcus is facing off with HSBC Finance - formerly known as predatory lender Household International. What do Neiman Marcus customers have in common with subprime, predatory lending, and late application of payments? Absolutely nothing, but Neiman Marcus selected HSBC Finance as their private label credit card processor. We questioned the move when it happened. In years past there was a correlation between troubled retailers and the selection of HSBC Finance as a credit card processor. The main exception is electronics retailer Best Buy.

This time Neiman Marcus wants to hold HSBC Finance to their existing contract. HSBC, on the other hand, claims they are losing money. “Sometime in the past year, HSBC realized it stood to lose more than $8.5 million over the next three years under the existing terms of its contract with Neiman Marcus. As a result, it put pressure on Neiman Marcus to agree to a new arrangement that would raise charges and interest rates to customers. When an agreement couldn’t be reached after several months, HSBC reportedly threatened to cancel the accounts unless Neiman Marcus agreed to its terms” said an article on the subject.

Sorry, but HSBC should never been considered by Neiman Marcus, and now the company is finding out why. HSBC Finance, on the other hand, might use force and high pressure tactics with customers but it might not work with Neiman Marcus. The advantage we see is that details of the existing contract will be disclosed in court documents. Years ago Household International tried the same thing with Echostar/Echosphere. Neiman Marcus should have learned. What the world learned is HSBC Plc in London still has very little control over HSBC Finance, and HSBC Finance has a real desire to credit payments one day late for their credit card operations. They have been doing so since 1994. The current stalemate has no peaceful resolution because one will take a loss while the other will take a reputional hit.