Bad acquisition hurt HSBC earnings
TEXT OF STORY
Bill Radke: Meanwhile, Europe’s biggest bank, HSBC, reports its half-year earnings today. And analysts are expecting buckets of red ink, in large part thanks to the bank’s dealings here in the United States From London, Stephen Beard explains.
Stephen Beard: Analysts are forecasting a net loss of $600 million for HSBC in the first half. Compare that with a profit of almost $8 billion for the same period last year. The bank hit big problems in the U.S. with things like car loans and credit cards.
Michael Prest of Breaking Views says that it’s because of a disastrous acquisition the bank made at the height of the American lending boom:
Michael Prest: They bought an outfit called Household International. which was a very large lender to poor households and to people who were generally one way or another bad credit in the U.S. And those chickens have come home to roost with an absolute vengeance.
Since it bought Household, the bank has set aside more than $50 billion, most of it to cover bad U.S. consumer loans. But, says Prest, other parts of the HSBC empire are doing well, especially in the Far East. The bank is likely to become the first foreign bank listed in China.
In London, this is Stephen Beard for Marketplace.
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