Published November 07, 2012
LONDON – HSBC is nearing the sale of more than $6 billion of U.S. mortgages and other personal lending as part of its accelerated run-down of its troubled U.S. loans book.
HSBC this week said in its quarterly results it had moved $3.7 billion of unsecured personal loans in the United States to its "assets held for sale.
In addition, HSBC's North American results showed it had a $3.2 billion portfolio of real estate loans as "held for sale" to a "third party investor".
HSBC, Europe's biggest bank, continues to deal with the legacy of a disastrous U.S. foray in 2003 when it bought Household International for $15 billion.
Years of aggressive lending followed that deal, leaving HSBC as one of the biggest sub-prime lenders when the U.S. housing market crashed and saddling it with losses of tens of billions of dollars.
When the scale of the crisis became clear HSBC shut its U.S. consumer loans business and has been running down the book.
The portfolio, mostly real estate, stood at $44.2 billion at the end of September, down $7 billion in the last year and less than half its $101 billion total in 2008 but still big enough to potentially take a decade to run off.
Stuart Gulliver, who took over as HSBC chief executive at the start of 2011, wants to accelerate the rundown of the assets.
The bank has said buyers had this year started showing interest in portfolios at prices it would consider, and BlackRock had worked on valuing assets.
Bad debt losses from the run-off book have been falling steadily, although a spike in impairments a year ago hit HSBC's share price and prompted Gulliver to look harder at speeding up the process.
The unsecured and real estate portfolios could be sold in the first quarter of next year, a person familiar with the matter said.
HSBC declined to comment on whether buyers are lined up.
It has not provided details on the portfolios, although it said earlier in the year investors had shown interest in specific regions, citing property in Nevada or Florida.
Under Gulliver the U.S. business will focus more on commercial banking and investment banking, shifting away from retail customers. HSBC last year sold its U.S. credit card business and 195 branches, about half its network.
It is likely to leave the U.S. business looking more like HSBC in Canada, which made $602 million in the first half of this year, including $307 million from commercial banking and $174 million from investment banking.
But it may face a hostile regulator in the United States after being slammed for lax anti-money laundering compliance in Mexico.
HSBC this week said it faces a U.S. fine of "significantly" more than $1.5 billion and criminal charges, which could hinder its activities there. (Editing by David Cowell)