HSBC to shut down US subprime unit
HSBC Holdings will close its US subprime mortgage unit because the business is no longer sustainable.
By TNN |
NEW YORK: HSBC Holdings, Europe’s biggest bank, said on Friday that it would close its US subprime mortgage unit, cutting 750 jobs and taking an $880 million writedown, because the business is no longer sustainable.
Decision One has restructured operations in the past year as defaults on risky subprime loans to people with weak credit have escalated.
The unit centralised loan processing and underwriting and reduced the number of operating centres to two from 17. In the first six months of this year, HSBC sold about $371 million in loans originated by Decision One to its US bank and recorded a pre-tax loss of $400,000 from the deal.
In contrast, HSBC booked a $17 million pre-tax gain on Decision One loan sales during the fourth quarter of 2006, its financial statements show.
Decision One has restructured operations in the past year as defaults on risky subprime loans to people with weak credit have escalated.
The unit centralised loan processing and underwriting and reduced the number of operating centres to two from 17. In the first six months of this year, HSBC sold about $371 million in loans originated by Decision One to its US bank and recorded a pre-tax loss of $400,000 from the deal.
In contrast, HSBC booked a $17 million pre-tax gain on Decision One loan sales during the fourth quarter of 2006, its financial statements show.
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