Household HSBC Watch

HSBC said the bank would export the business model of Household International, purchased by HSBC in 2003. As disturbing as it sounds, HSBC bragged about exporting the so-called “Household Model” even though history will show the model as a predatory lender. Subprime losses in the billions of dollars showed a failure. Pragati Finance is an HSBC venture in India. What is the plan and what is the business model? HSBC India started offering unsecured personal loans between Rs 40,000 and Rs 1 lakh last year under the branding of Pragati Finance. Unsecured personal loans? It sounds like those $5000 loans anybody could get from HFC and Beneficial Finance in the United States.

If Pragati Finance graduates to credit cards and automobile finance we know exactly what the model is. India should take notice before Pragati Finance opens a mortgage lending division. That is where the trouble will begin, if history is any indicator, and history usually is. HSBC currently has a big problem in the UK and the US. HSBC India has become cautious in consumer financing and credit card segments, according to its country head Naina Lal Kidwai.

Household International was morally bankrupt and financially bankrupt when HSBC bought the company in 2003. From 2003 through the present HSBC had five years to change the company. A simple name change to “HSBC Fiance” did nothing to protect American cusomters and the world economy from the morally bankrupt side of the firm. Now HSBC is paying a high cost. We hear less and less about “exporting the Household Model” but the talk is still there. You can hear it in the halls of HSBC headquarters in London.