HSBC Holdings PLC announced Thursday it plans to launch its first retail banking branches for wealthy clients in Japan early next year. The British financial conglomerate said in a statement it will start banking services in January for individuals with at least 10 million yen ($87,000) in assets. HSBC said the number of potential clients is estimated at 6.3 million in the Tokyo region and around the western metropolis of Osaka.

Eric Knight, chief executive of Knight Vinke, has sent a letter to all members of the HSBC board requesting further meetings. Negotiations have been going on between the bank and the fund since Mr Knight sent a letter to Stephen Green, HSBC’s executive chairman, on May 25. Knight Vinke, which has a stake of less than 1 per cent in HSBC, last night refused to comment on which area of the bank’s strategy it disapproved of.

Watchdog organization Household – HSBC Watch said HSBC is fundamentally sound but Household International, now called HSBC Finance, is a problem HSBC never controlled. “From the way the division operates to the way customer service talks to customers the predatory ‘pay for performance’ aspect reflects poorly on HSBC” said the group. “There are plenty of examples, and we think we know what Knight Vinke objects to. We have objected to it for years” said the group.

The watchdog found the HSBC commercial in breach of advertising rules and told the bank not to repeat it unless changes were made.

“A real nice young man came out to see me,” Mrs. Mouser recalled. “He could have been my grandson.”

That appraiser compared her 1977 mobile home with two new standard homes with two-car garages. Using those homes as benchmarks, Beneficial agreed to lend $34,730 on her home, valued at $43,500, in 2000. Mrs. Mouser’s loan carried an interest rate of 14.88 percent, and she paid 7 points, or $2,431, at closing to get that rate, along with $270 to Beneficial for the appraisal.

A spokeswoman for HSBC, the parent company of Beneficial, said it did not comment on matters involving specific customers.

In 2003, when Mrs. Mouser could not meet the payments, she contacted Ira D. Joffe, a lawyer in Houston. He found that her property was valued by the county at $19,970, less than half of what Beneficial had estimated.

“I promised to depose the appraiser’s Seeing Eye dog if there was a lawsuit,” Mr. Joffe recalled telling Beneficial.

Beneficial released the lien. But then Mrs. Mouser got a tax bill for $10,000, or the amount owed on the $29,566 that Beneficial had treated as a canceled loan.

“The tax bill scared her to death,” Mr. Joffe recalled. “It took a letter from an accountant and two letters from me to get the I.R.S. to go away.”

(excerpted from a full article)

NEW YORK, Aug 15 – First Premier Bank agreed to refund $4.5 million to settle a probe into the marketing of credit cards to consumers with poor or no credit histories, the New York State attorney general said on Wednesday. The South Dakota-based bank will also pay $105,000 in penalties and costs, Attorney General Andrew Cuomo’s office said in a statement. The company also agreed to reform its billing and marketing practices, the AG’s office said.

In a separate statement, First Premier said it disagreed with the “characterizations made by the New York attorney general.” “These were common business practices within the industry and we discontinued these practices on our own initiative a number of years ago,” Premier Bankcard Chief Executive Miles Beacom said in the statement. (First Premier Bank and Premier Bankcard are sister organizations under the holding company of United National Corp.)

The AG’s office said its probe, begun after consumer complaints, found First Premier Bank lured customers by falsely representing that they were pre-approved for a credit limit of up to $2,000 at a 9.9 percent fixed interest rate. The bank also told consumers it would not charge a processing fee for opening an account, the AG’s office said. But most consumers received a credit line of $250 to $300 at a 9.9 percent interest rate that could more than double without notice, the attorney general said, adding that the company also billed $178 upfront fees for processing the credit card application.

Most consumers reported their balances ballooned within a few months, in some cases from $20 to $400 due to hidden fees, the AG’s office said.

Good for you Alex. Here is an open letter to HSBC’s Alex Hungate:

I have been monitoring Household International well before HSBC bought them. That is because I was a customer. I regret every moment of it. I was in the U.S. military, where I attended a class about personal finance. When the discussion turned to personal complaints about finance companies we discovered that over 10 percent of attendees had problems directly traceable to HSBC Finance Corporation. The same problems continue today. I think you have a big job ahead of you.

After the personal finance discovery, my wife had a Best Buy card, also handled by you and your people. For her interest free financing she was graced with bills every month for eleven months. Month twelve saw no bill. A deliberate attempt to negate the interest free promotion, collect all interest, late fees and anything else HSBC wanted to scam out of her actually failed. We held another personal finance class after discovering that HSBC Finance cannot be trusted. Sorry Alex, but we discovered a trend.

Alex, let’s go on to the next HSBC subject that needs your attention. People who buy vehicles financed by HSBC need to know they can get a clear title when the vehicle is paid off. As consumer advocates and a watchdog organization we were successful in getting resolution for the first two people that asked us for help. After that our HSBC point of contact was no help at all. The problem needs to be solved. Good luck with that one.

I consider you to be an intelligent man Alex. Unlike some at the top of HSBC you seem to want to do a good job. We think you need to find out why credit card payments can be late when they are mailed two weeks early. I’m not talking about payments that were credited to the prior month. I’m talking about payments that were not really late either. If I mail my Citi payment, my Chase payment, my mortgage payment, and my car payment on the same day as my HSBC credit card payment everything processes correctly except my HSBC credit card payment. Perhaps that is why 80 percent of those who rated their HSBC card said it was poor or totally unacceptable. I think it is fraud. Good luck with that one too.

Actually Alex, you need to solve other problems with HSBC payment processing. Since 1994, and according to Shea vs Household, some of the trends you need to stop are deeply rooted. Good luck, since nobody has been able to stop the issues. For instance people report to us every day about the HSBC United States online payment website. The biggest complaint is that it does not work for everybody. Could it be the automated version of my wife not getting a statement in month 12? Some say that remains to be seen. I’ve seen if for years. What remains to be seen is if you can fix it before HSBC gets sued again.

Subprime issue are deeply rooted in HSBC Finance Corporation and former Household International employees. I called them “predatory lending issues” well before the $484 million predatory lending settlement. After that Household International was a predatory lender in everyone’s eyes. Since HSBC did not fire everyone and start with a clean slate HSBC is a predatory lender. We are what we buy, so to speak. I know you prefer the terms ‘subprime’ or ‘just under prime’. Sorry to break the news to you Alex.

Alex, if you really want to see what’s wrong with HSBC Finance Corporation just read our live complaints. They are right here. Have you considered that your job is to address consumer finance for HSBC with the exception of HSBC Finance Corporation? The jury is out on that one. You have much to do and we wish you well. If I were faced with the issue I would sell HSBC Finance to somebody else, get rid of the HFC and Beneficial names, and become successful at your job. Don’t let them drag you down to their level. You and I both know that global bankers and finance company personnel don’t run in the same circles. They don’t even belong to the same country clubs.

When the credit card issuing bank also has huge losses in subprime, or exposure to subprime, the red flag is flying high. When a bank or finance company has Shea vs Household in their history – read that as Household International and HSBC – the red flag is waving back and forth. Clearly HSBC made more on asset-backed securities than they paid out in the Shea settlement which was a mere $11 million (USD). But when late processing of credit card payments never stopped after Shea vs Household investors must ask why. Here is how part of it works:

Bubba applies for a credit card and gets one with a $300 credit limit at 10 percent interest. They charge Bubba $99 for issuing the card, $99 as an annual fee, and Bubba can actually buy one tank of gasoline without going over the limit. Bubba gets a bill, pays it immediately, and the payment gets procesed one day after the due date. Bubba’s rate goes to 29.99 percent, he gets a $39 late fee, a $39 overlimit fee, and a bad attitude. The bank, however, has a bogus $350 credit card asset, rolls it into an asset-backed security along with 100,000 other cards like Bubba’s, and sells $35 million as asset-backed securities. The problem is there are no assets to back the security. There is no collateral. Recognizing that they have been scammed, twenty percent of the Bubba account holders don’t even send a second payment. After six months forty percent of the Bubba accounts quit paying. The rest pay off the account immediately and talk bad about the bank for the rest of their lives.

Automobile lending made of up of the best and brightest stars from Chrysler Finance and GMAC, and access to the HSBC Auto Finance infrastructure, could be a blockbuster deal. Credit card operations could also be profitable. GMAC also has ResCap and last year, Residential Capital was the third-largest originator nationwide of so-called Alt-A loans, which are typically somewhere in between subprime and prime in terms of credit quality. That would be a step up from HSBC’s subprime.

In the ‘buy low, strip and flip, sell high’ business model, HSBC’s consumer finance business would be a good fit for Cerberus. Most of the layoffs would happen at HSBC Finance Corporation, with some coming from Chrysler. Cerberus wants the customer base, the software, models, and infrastructure. Cerberus does not need the stigma of predatory lending, the HFC name, nor the Beneficial Finance or Decision One names. Look for those to disappear from the American landscape forever, along with most of the employees.

Actually we must ask the big question. What does Cerberus know about designing cars? The answer is ‘not much.’ That part of Chrysler would bet stripped and flipped too. Cerberus is also looking at H&R Block’s Option One subprime lending division. Some analysts predict Cerberus will package the entire subprime assets of Option One, GMAC, and HSBC Finance. After the subprime crisis is over they might be sitting on some money, albeit a fluid dynamic would drive the investment strategy. If the assets are worth anything they might collateralize.

On the other hand if Cerberus can generate enough to give Charles Schwab and other stock brokers some serious competition perhaps some of the real estate can be turned into a valuable commodity. Let watch and see how this supposition plays out.

LONDON, Aug 6 – HSBC Holdings said on Monday it had appointed Alex Hungate to the new role of Head of Personal Financial Services and Marketing, effective September. HSBC said Hungate, previously the managing director of Reuters Asian business, would also take responsibility for overseeing the group’s advertising, sponsorship and customer marketing activities.

Mortgage originators like Accredited Home Lenders usually sell their loans on to other investors soon after they’ve offered them to home buyers. That can either be done as a whole loan transaction or as a securitization in which mortgages are packaged up into mortgage-backed securities.

Whole loan sales have become more difficult. Originators used to be able to sell mortgage at a 2% premium, but now they get no premium or have to sell at a discount in many cases, Accredited said. A big chunk of Accredited’s revenue used to come from gains it made when it sold mortgages at a premium in whole loan transactions. However, there are fewer of those buyers now.

HSBC bought 30 percent of Accredited’s mortgages in 2006. But in April 2007, HSBC stopped buying subprime loans according to Accredited. At least HSBC quit buying Accredited’s subprime loans. One HSBC customer report sent to Household – HSBC Watch, and published on their website, is from a woman who said she refinanced to get away from HSBC. A short time later her mortgage was right back with her new lender – HSBC.