21st Sep 2007 16:00
HSBC Holdings PLC21 September 2007 The following news release was issued in the United States by HSBC FinanceCorporation, a 100 per cent indirectly owned subsidiary of HSBC Holdings plc. HSBC FINANCE EXITS NON-PRIME WHOLESALE MORTGAGE BUSINESS Decision One channel to close Prospect Heights, Ill. - As part of the continued review of its mortgage lendingbusiness, HSBC Finance Corporation ("HSBC Finance") said today that it willclose its non-core wholesale lending channel, Decision One Mortgage, whichoriginates non-prime mortgages through brokers. HSBC Finance will focus onoriginating and servicing loans through its consumer lending branch networkunder the HFC and Beneficial brands. "We are delivering the strategy put in place earlier this year to position HSBCFinance's mortgage business for long-term success," said Brendan McDonagh, ChiefExecutive Officer. "Today's market requires a strong and flexible businessplatform, and we will focus on our branch network as the primary point toprovide our HSBC Finance customers with loans and mortgages." "This is a small part of our U.S. business," said Michael Geoghegan, Group ChiefExecutive, HSBC Holdings plc. "It's no longer sustainable and not the rightplace to allocate capital in the future. We said we would make tough decisionsand we have done exactly that." Approximately 750 Decision One employees, primarily in Fort Mill, S.C., Phoenix,Ariz., and Charlotte, N.C., will be affected by the closure of the wholesalenon-prime channel. "We greatly appreciate the dedication and contribution of ourDecision One employees during these unique market conditions," said McDonagh.HSBC Finance will continue to provide its contractual servicing and supportfunctions to manage down the current Decision One warehoused volumes, currentlystanding at $349 million. As a result of this decision, and when considered in conjunction withmanagement's decision in March 2007 to discontinue correspondent channelacquisitions in its Mortgage Services business (of which Decision One is part)HSBC Finance will record a non-cash charge to eliminate the goodwill allocatedto this segment at the time of acquisition of HSBC Finance. As a result, itwill record a non-cash after-tax goodwill impairment of approximately $880million on a U.S. GAAP basis. Further, it will incur approximately $65 millionof after-tax charges for restructuring costs, including one-time employmenttermination benefits, fixed asset write-downs and facility closure costs. Thefinancial effects will be incurred in the second half of 2007. There will be no associated goodwill impairment recognized by HSBC Finance'sultimate parent, HSBC Holdings plc. About HSBC Finance Corporation HSBC Finance Corporation is a subsidiary of HSBC North America Holdings Inc.,one of the top ten financial organizations in the United States with assetstotalling more than $400 billion. HSBC Finance Corporation's subsidiariesprovide real estate secured loans, auto loans, MasterCard(R) and Visa(R) creditcards, private label credit cards, personal non-credit card loans, taxpayerfinancial services and specialty insurance products. Notes to editors: HSBC Holdings plcHSBC Holdings plc serves over 125 million customers worldwide through around10,000 offices in 83 countries and territories in Europe, the Asia-Pacificregion, the Americas, the Middle East and Africa. With assets of some US$2,150billion at 30 June 2007, HSBC is one of the world's largest banking andfinancial services organisations. HSBC is marketed worldwide as 'the world'slocal bank'. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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