Household HSBC Watch

Part of what HSBC thought was a good deal when HSBC bought Household International was that HSBC did not guarantee the debt of the troubled predatory lender. Now that subprime losses bring the desbt in question there has been discussion of dumping HSBC Finance. Kathleen Shanley, analyst for independent research firm Gimme Credit, said there are other cases where companies did not guarantee debt of finance businesses they acquired.

HSBC did not guarantee the debt of Household International (now HSBC Finance and American International Group does not guarantee the debt of International Lease Finance Corp or American General Finance, she said. “In both cases, however, the finance companies have received credit from the rating agencies for implied support, and the parent companies have from time to time contributed capital or taken other steps to support their subsidiaries,” she said.