HSBC says Household liabilities fall to $70 bln

HONG KONG - HSBC Holdings 0005.HK>, Europe’s biggest bank, is working off $20 billion worth of loans per year in its U.S. Household Finance Corp. unit as it winds down the business, said the bank’s CEO.

By (Reuters)

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Published: Mon 24 May 2010, 5:58 PM

Last updated: Mon 6 Apr 2015, 11:10 AM

Household Finance Corp’s liabilities stood at about $70 billion, Chief Executive Michael Geoghegan said in Hong Kong on Monday ahead of the bank’s annual shareholders’ meeting in London on May 28.

The unit’s run-off portfolio, which excludes its credit cards arm, was down from $78.9 billion in loans and advances at the end of 2009 and $100.4 billion at the end of 2008.

HSBC is running down its U.S. consumer finance business after losing billions of dollars as loans soured during the sub-prime housing crisis.

Earlier this month, the bank said that in the first quarter bad debts fell to their lowest level in more than two years, led by a drop in the United States.

HSBC expanded in the United States when it acquired Household Finance Corp at the beginning of the credit boom in 2003 for $14.8 billion, a deal that allowed the traditionally conservative lender to expand among U.S. subprime borrowers.

As the U.S. economy deteriorated from 2006, HSBC began to pull back from U.S. subprime borrowers and stopped originating home loans and auto financing. The move left HSBC’s main focus in the world’s biggest economy on corporate and commercial business, private and premier banking, and its credit card business.

Separately, HSBC executives said they saw no changes in the bank’s China expansion plans due to Beijing’s efforts to cool China’s economy, and also saw no increase in impairments from the Eurozone debt crisis.

“Our major business is in the UK,” said Geoghegan. “And the UK economy is in better shape than the EU”

Global markets have been gripped by fears that a debt crisis engulfing Greece will spread to other highly indebted nations, particularly in southern Europe, dragging down the continent’s economy and hitting trade with the United States and Asia.

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