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HSBC closes US sub-prime division | HSBC closes US sub-prime division |
(about 4 hours later) | |
Banking giant HSBC is to close part of its US sub-prime mortgage business, cutting 750 jobs in the process. | Banking giant HSBC is to close part of its US sub-prime mortgage business, cutting 750 jobs in the process. |
US subsidiary HSBC Finance is shutting its Decision One unit at a cost of $945m (£468m), as it becomes the latest firm hit by the crisis in the sector. Despite the move, HSBC said it would continue to offer some sub-prime mortgages through its US branches. | |
Back in February, HSBC was one of the first lenders to warn of rising default levels in the US sub-prime sector. | Back in February, HSBC was one of the first lenders to warn of rising default levels in the US sub-prime sector. |
'Tough decisions' | 'Tough decisions' |
The 750 job losses will be spread across Decision One's two offices in Phoenix, Arizona, and Charlotte, North Carolina. | The 750 job losses will be spread across Decision One's two offices in Phoenix, Arizona, and Charlotte, North Carolina. |
"It's no longer sustainable and not the right place to allocate capital in the future," said HSBC chief executive Michael Geoghegan. | "It's no longer sustainable and not the right place to allocate capital in the future," said HSBC chief executive Michael Geoghegan. |
"We said we would make tough decisions and we have done exactly that." | "We said we would make tough decisions and we have done exactly that." |
In March HSBC stopped buying mortgage loans from other financial bodies to reduce its exposure to potential defaults. | In March HSBC stopped buying mortgage loans from other financial bodies to reduce its exposure to potential defaults. |
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