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HSBC to sell new shares and cut jobs

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HSBC to sell new shares and cut jobs


Europe’s biggest bank, HSBC, is taking drastic measures to offset a massive fall in profits.

The London based firm will shut down much of its lending business in the US and sell billions of euros worth of new shares, which will be offered at half the price the stock was selling for at the end of last week. Just over 14 billion euros worth of shares are being offered and 6,100 jobs will go in the US as HSBC’s consumer lending business there – which trades under the names HFC and Beneficial – is abandoned. Much of HSBC’s lending in the US was to so-called sub-prime borrowers, a market which has completely collapsed. HSBC’s Chief Executive Michael Geoghegan said: “There is no longer a viable consumer lending product, therefore HSBC Finance has announced today that it will cease to write new consumer finance business through the HFC and Beneficial brands in the USA. It will close most of its HFC and Beneficial branches and will focus on running off or selling its portfolio of real estate loans.” That is expected to take years as HSBC still has around 50 billion euros worth of risky loans in the US from its purchase six years ago of a sub-prime mortgage lender there, a deal it now says it regrets. Despite a 62 percent fall in profit for 2008, HSBC is still doing much better than most other big banks.

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