HSBC Become Latest Victim Of US Sub-Prime Crisis

Wed, 14 Nov 2007

The UK’s largest bank HSBC has announced third quarter bad debts totalling $3.4bn as a result of the US sub-prime lending crisis.

But the bank added that its overall profits will be higher than twelve months ago as revenue growth offset the bad debt charge.

HSBC is the latest financial victim of the credit crisis linked to problems in the US sub-prime market that lent money to people with poor credit histories.

Rival banking firms Citigroup (the world’s largest bank), Merrill Lynch and UBS have also revealed billions of dollars of exposure to US sub-prime debt .

HSBC, which was reporting on its performance during the three months to the end of September, said that the problems in the US real estate market could continue in coming months.

It said that the bad debt charge at its US consumer finance business was $1.4bn more than implied by extending first-half trends, reflecting the extent of the credit crisis.

A HSBC statement read: "There is the probability of further deterioration if the current housing market distress continues and further impacts the broader economy ."

While most of the big write downs announced by several Wall Street banks are related to investment banking exposure to mortgage-related products, the loss recorded by HSBC is related to mortgages it has on its books.
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