HSBC, Europe’s biggest bank, said the company may “rethink” its US credit card business if financial and regulatory pressures increase.
“If these become too strong, and we are not able to leverage this business more fully on a group basis, we may have to rethink it,” chief executive Michael Geoghegan said today at HSBC’s annual shareholders meeting in London.
“We believe that unless there is further significant deterioration, the assets in this business can ride out the storm.”
The credit card unit is the last active part of HSBC’s US operation, after the bank announced plans to wind down most of the businesses acquired when it bought Household International in 2003.
HSBC raised £12.5 billion ($20 billion) last month in a rights offering after setting aside $57 billion over three years largely to cover bad loans in the US.
Mr Geoghegan dismissed suggestions that HSBC should walk away from its obligations in the US, saying this wouldn’t be in the interests of shareholders.
“The suggestion, in my opinion, is irresponsible, I might event say dangerous,” he said today.
HSBC, which is focusing growth on emerging markets, said on May 11th that first-quarter pretax profit was “well-ahead” of last year, helped by fair-value gains on its own debt.
Chairman Stephen Green said the bank’s focus on taking in deposits before lending helped protect it from the recent financial turmoil.
The bank has an 82 per cent deposit ratio, one of the strongest in the industry, he said.
Bloomberg