Reuters is reporting that HSBC intends to open new branches – bank branches, not HFC and Beneficial Finance branches – across the United States. Quoting Kevin Martin, executive vice president of HSBC Bank USA, the bank inteneds to open new branches with a focus on New Jersey, California and Washington D.C. Plans extend to 2009, if not further. One must ask how Martin intends to overcome the Household International / HFC / Beneficial / subprime / predatory lending stigma. Does HSBC intend to make bankers out of HSBC Finance employees?

Although Martin said HSBC has no “mass program to reduce staff” in the United States, there is a realignment and reduction in force at HSBC Finance – formerly known as Household International, and the source of billions in losses and writedowns for HSBC. It began around Thanksgiving 2007. The issue becomes one of regulation and regulatory control. Will the OCC permit HSBC to open new branches before HSBC corrects problems within HSBC Finance? What shall happen with loans HSBC purchased from Accredited Home Lenders? Can HSBC learn to pay overtime to employees properly entitled to such overtime? Many of the employees at HFC and Beneficial do not think so.

The bottom line is that HSBC Plc and HSBC USA try to put a nice smile and glossy finish on it, but the problems remain. Losses, lawsuits, complaints and a consumer lending division that operates as a ‘pay for performance’ entity within HSBC does not make for a good fit within a world class bank, nor in the minds of activist investors and shareholders.

Popularity: 7% [?]

No related posts.