HSBC takes $3.4B US hit from U.S. mortgages
Last Updated: Wednesday, November 14, 2007 | 12:00 PM ET
CBC News
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The list of global financial players taking big charges stemming from the U.S. mortgage sector continued to grow Wednesday as British bank HSBC Holdings Plc said it will take a $3.4 billion US hit.
The bank said it will take the charge in its third quarter due to rising losses in its HSBC Finance Corp. mortgage division in the United States.
"There is a probability of further deterioration if the current housing market distress continues," the company said.
HSBC said its quarterly profits will actually be higher, as the charge will be more than offset by rising revenues.
Investment bank Bear Sterns Cos. also disclosed Wednesday it will book a $1.2-billion US fourth-quarter writedown from its credit portfolio.
The company's chief financial officer, Samuel Molinaro, said the writedown should accurately revalue its subprime mortgages and collateralized debt obligations.
Bear Stearns took about $850 million in writedown in the third quarter.
On Tuesday, the second largest U.S. bank — Bank of American Corp. — said it will take a $3 billion US debt-related writedown.
Citigroup, Merrill Lynch and UBS are among the foreign banks that have detailed their subprime mortgage exposure, while Royal Bank of Canada, Scotiabank and CIBC are Canadian banks that will take charges in the current quarter.
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