What happens when HSBC dives in to subprime, takes a huge multibillion dollar loss, turns tail and runs away from customers, and alienates as many US citizens as possible? Wells Fargo has become the largest Western bank when measured by its stock market value after it leapfrogged rivals HSBC and JP Morgan last year.
I remember years ago when HSBC bought predatory lender Household International. One Chicago newspaper often published articles about job losses in Chicago. Stating sadness when companies left Chicago and jobs left with them, the paper reported that Household International was different. Nobody would miss them because of what they became – a predatory lender.
Now HSBC – the same bank that bought Household – is doing the same thing. Leaving New York, selling the credit card business, running off the mortgage business, and heading for China. Automobile financing was sold to Santander USA.
Since I follow HSBC every day, allow me to point out that HSBC once thought that credit cards would be their profit center. Credit cards would keep HSBC in business in America. Suprime was in the tank, and HSBC Auto had more missing titles than a 75-year old beauty queen, but credit cards were all good.
What shut down HSBC was credit card reform, financial reform, and an awakening by US regulators.
I do not write in this section of Lender Watch very much any more. So it seems fitting that I should write an obituary for HSBC consumer finance. HSBC collapsed as it lost its moral compass in the quiet of the corner suites and the accountants’ hushed calculations.
Allow me to quote the old Household International article from the Chicago Tribune back in 2002. “In global business, the takeover game is winner-take-all. The acquirer takes all the benefit. The acquiree gets taken. Either taken to the cleaners, taken down a notch or taken off the map.”