By: David Norton
It is no secret that the financial services industry is getting hit harder than ever in today's credit crunch. But one bank that has not received much publicity (mainly a good thing) is HSBC. When many big names such as AIG, Bank of America, Wachovia, and Citi are struggling just to keep their heads above water, HSBC has maintained what is considered to currently be a stronghold in today's ever volatile banking sector.
The London based bank has recently declared that it will give up its consumer finance sector, called HSBC:Financial. This is very significant for those looking for loans because HSBC who was once a big player in this field, is now out of the game all together. From the standpoint to relieve the credit crunch that we're seeing, this will not help consumers.
The logic behind such a brazen move is to shield HSBC from many of those sub-prime debts/loans that they were once taking on. With their consumer finance department out of the mix, the bank has potentially relieved itself from many of the toxic "assets" which plagued it and its competitors. So, if you're a consumer, HSBC will still issue credit cards, but you need to go somewhere else when looking for a loan.
HSBC declares that its failed consumer finance sector should be looked at as a lesson for the future. This oversimplified statement breaks down to the notion that their practices of lending to those who should have never qualified in the first place, should not be repeated (in fact, the industry practices as a whole should take heed). Though HSBC may have survived this recent internal catastrophe, we are far from the end with regards to surprises on Wall Street.
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