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H S B C Forced To Shut Down U S Operation

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http://uk.biz.yahoo.com/21092007/325/hsbc-...prime-unit.html

Friday September 21, 04:35 PM

HSBC to shutter U.S. subprime unit

NEW YORK (Reuters) - HSBC Holdings (0005.HK - news) <HSBA.L>, Europe's biggest bank, said on Friday that it would close its U.S. subprime mortgage unit, cutting 750 jobs and taking an
$880 million (436 million pound) writedown
, because the business is no longer sustainable.

Asking for a bonus this year at HSBC will be like Oliver asking if he can have some more gruel. :(

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http://uk.biz.yahoo.com/21092007/325/hsbc-...prime-unit.html

Friday September 21, 04:35 PM

HSBC to shutter U.S. subprime unit

NEW YORK (Reuters) - HSBC Holdings (0005.HK - news) <HSBA.L>, Europe's biggest bank, said on Friday that it would close its U.S. subprime mortgage unit, cutting 750 jobs and taking an
$880 million (436 million pound) writedown
, because the business is no longer sustainable.

Asking for a bonus this year at HSBC will be like Oliver asking if he can have some more gruel. :(

...did they do any sub prime lending in the UK....?..... :o

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...did they do any sub prime lending in the UK....?..... :o

I was thinking exactly the same. On the BBC it showed that of the major commercial banks, HSBC depended least on money markets to finance its mortgages... The BBC seemed to suggest that the HSBC was the only bank to finance entirely by deposits... but I could have misinterpreted their badly explained graph.

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I reckon that current events are telling us that we had better get some proper reguations in place pronto.

I'm seeing banks writing off gargantuan amounts and still showing profit and still mumbling about bonuses.

These places are making too much money. We must temper capitalism, otherwise we can never stop this happening again. A writedown of almost a a billion and does it even make a dent?

The BOE underwriting 24bn then pumping 10bn. How much have the Fed and the ECB pumped? The numbers are completely mad. I remember a time when central banks baulked at saving things that cost a mere billion.

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...did they do any sub prime lending in the UK....?..... :o

No - there's no sub prime in the UK....giggle.. :rolleyes:

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I was thinking exactly the same. On the BBC it showed that of the major commercial banks, HSBC depended least on money markets to finance its mortgages... The BBC seemed to suggest that the HSBC was the only bank to finance entirely by deposits... but I could have misinterpreted their badly explained graph.

Yeah, but they could still do it and they would just keep it on their books. It would also mean they are less likely to have a problem if/when it goes funbags up.

Edited by bobthe~

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Decision One relies on a network of independent mortgage brokers to find borrowers and to submit loan applications, a model that has been curtailed or discontinued by other lenders burned by lax underwriting standards and outright fraud.

Isn't this Northern Rock's business model ?

"Some brokers are still recommending some Northern Rock home loans."

http://business.timesonline.co.uk/tol/busi...icle2452407.ece

Edited by Ash4781

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Yeah, but they could still do it and they would just keep it on their books. It would also mean they are less likely to have a problem if/when it goes funbags up.

Sorry, I wasn't being very clear there.

What I meant was there is sub prime lending and there is not being able to fund your lending (sub prime or otherwise) because the markets have dried up.

They can be separate is what I meant, but it is obviously the sub prime specialist lenders themselves who are hit the hardest (shame).

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I reckon that current events are telling us that we had better get some proper reguations in place pronto.

I'm seeing banks writing off gargantuan amounts and still showing profit and still mumbling about bonuses.

These places are making too much money. We must temper capitalism, otherwise we can never stop this happening again. A writedown of almost a a billion and does it even make a dent?

The BOE underwriting 24bn then pumping 10bn. How much have the Fed and the ECB pumped? The numbers are completely mad. I remember a time when central banks baulked at saving things that cost a mere billion.

Well said. However, I can't see it happening while an "upper-elite" are feeding so well from the trough. They'll still get bonuses of more than most earn in a lifetime, and they'll somehow manage to justify them to shareholders.

This was all hidden in the "olden days". It's in your face theft now, and they don't give a toss because there's nothing anyone can do about it.

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Well said. However, I can't see it happening while an "upper-elite" are feeding so well from the trough. They'll still get bonuses of more than most earn in a lifetime, and they'll somehow manage to justify them to shareholders.

This was all hidden in the "olden days". It's in your face theft now, and they don't give a toss because there's nothing anyone can do about it.

Didnt HSBC get out of London property market by selling their skscraper in Canary Wharf a few months ago \?

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I reckon that current events are telling us that we had better get some proper reguations in place pronto.

I'm seeing banks writing off gargantuan amounts and still showing profit and still mumbling about bonuses.

These places are making too much money. We must temper capitalism, otherwise we can never stop this happening again. A writedown of almost a a billion and does it even make a dent?

The BOE underwriting 24bn then pumping 10bn. How much have the Fed and the ECB pumped? The numbers are completely mad. I remember a time when central banks baulked at saving things that cost a mere billion.

I've tried to post this, both to forum and news, but not up yet. It goes some way to explain how write offs equals bonuses

http://money.cnn.com/news/newsfeeds/articl...28_FORTUNE5.htm

Works like this. A bank suffers a reduction in credit worthiness. That means that the market expectation of the value of its debt is reduced, hence, when marked to market, it owes less. If you owe less, you've made a gain! Hooray for accountancy. Bonuses all round.

I wonder if that was what Northern Rock were planning? Their paper is viewed as worthless, so they owe less, and make a huge gain. All it takes is a run on the bank, and you gain! Stupidly the Bank of England misunderstood, interfered, and stopped the run. Those Northern Rock execs must be furious - spoiling their scheme like that.

Similar with BTL. Incorporate yourself in Delaware, see house prices drop, , lose credit worthiness, mark to market & re-appraise losses on flats, owe less, make gain. Minting it! Who says returns on BTL aren't great.

If that sounds like madness, take another look at the article, and ask yourself the difference between that and Goldman booking $300m.

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Well said. However, I can't see it happening while an "upper-elite" are feeding so well from the trough. They'll still get bonuses of more than most earn in a lifetime, and they'll somehow manage to justify them to shareholders.

This was all hidden in the "olden days". It's in your face theft now, and they don't give a toss because there's nothing anyone can do about it.

They did a fair bit of 'troughing' in the past,but I think new very, very highs have been reached in the last 20 odd years. That's part of the problem. Wealth distribution all wrong, too top heavy.

I seem to recall that was most of the problem before the depression.

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Sorry, I wasn't being very clear there.

What I meant was there is sub prime lending and there is not being able to fund your lending (sub prime or otherwise) because the markets have dried up.

They can be separate is what I meant, but it is obviously the sub prime specialist lenders themselves who are hit the hardest (shame).

.....Northern Rock financed their mortgage lending mainly from the inter bank market that dried up...that was the issue revealed....

....not revealed or even discussed was the quality of Northern Rock's book, sub prime , prime , self cert or btl .....nor was any exposure to US poisoned wraps which are possibly not an issue for them (please advise) ......

...these are three risk elements......the fourth is US mortgage lending ....here HSBC (the local bank) were directly involved with offices lending direct into the US sub prime market.....often through intermediaries....

...we should hear a lot about all four elements from all banks over the next few months..... :o:o:o

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http://uk.biz.yahoo.com/21092007/325/hsbc-...prime-unit.html

Friday September 21, 04:35 PM

HSBC to shutter U.S. subprime unit

NEW YORK (Reuters) - HSBC Holdings (0005.HK - news) <HSBA.L>, Europe's biggest bank, said on Friday that it would close its U.S. subprime mortgage unit, cutting 750 jobs and taking an
$880 million (436 million pound) writedown
, because the business is no longer sustainable.

Asking for a bonus this year at HSBC will be like Oliver asking if he can have some more gruel. :(

HSBC profits last year was an eye water £11Bn, oh well just another £10.5Bn to go, Oliver may well get some more this year.

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So what happens to those who have mortgages with this company - are the mortgages sold on, do they have to remortgage? Are the loans called in? Are their homes reposessed?

......they paid US15 billion in 2003 for this business ...the write-off announced adds to the provisions made last year ...they have other subsidiaries in the US who can look after the book or maybe they can package some of the loans and sell them on....!...... :ph34r::ph34r::ph34r:

http://findarticles.com/p/articles/mi_qn41...09/ai_n17227503

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So what happens to those who have mortgages with this company - are the mortgages sold on, do they have to remortgage? Are the loans called in? Are their homes reposessed?

Nothing happens to people who have taken out the mortgages.

The bank can't "call in a loan" or reposess you because they go bust.

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