Bank Loses Billions In US Mortgage Crisis

Banking giant HSBC has lost £8.7bn as a result of the credit crunch - most of that in its US mortgage and consumer credit arm.

Bank under pressure to revamp
It has been by far the worst affected by the financial crisis in the US housing market, losing more than its four major rivals put together.
HSBC is the last of the "big five" British banks to report its earnings.
The UK's other major banks - Barclays, Royal Bank of Scotland (RBS), Lloyds TSB and Halifax and Bank of Scotland - have already reported their annual results.
Together with a number of smaller High Street lenders, they have made an estimated collective loss of about £5bn from the US sub-prime meltdown.
But despite this it has made £12.2bn in annual pre-tax profits, up 10% on the previous year.
Analysts had been expecting anywhere between £11.8bn and £13.3bn - the figure for the 12 months before was £11.1bn.
HSBC is the last of the "big five" British banks to report its earningsIt has seen high-risk or sub-prime US borrowers struggle to meet loan repayments over the past year as interest rates have increased, leading to record default rates and repossessions.
It has shut hundreds of branches in its US consumer banking division, HSBC Finance Corporation, (HFC), over the past year as the credit crunch took its toll.
The scale of the losses is expected to increase pressure on the bank's management from activist shareholders to overhaul its policy with regard to its troubled US arm.
Knight Vinke Asset Management, owner of less than 1% of HSBC, has called on the bank to sever all ties with HFC.
The investment group wants directors to focus instead on growing markets in Asia.
In November, HSBC gave an upbeat view on trading in the UK, which it said was driving a strong performance in its European arm, and UK lending was seeing signs of improvement in the third quarter.
Looking ahead, the group warned: "The outlook for the rest of 2008 is uncertain. The economic slowdown and the credit outlook in the US may well get worse before they get better."

This article is from Sky News March 03, 2008