HSBC Wrote Off 51 Million USD

America suffered last year from the subprime loan industry fall. This fall has affected many worldwide, especially those in the UK. Numerous companies in the UK had a hand in the US market with the mortgages and they are now trying to save themselves from having the same downturn in the UK market. HSBC is one of the many companies that had a hand in the US market. They are now having to increase the amount of write offs to Americans. Currently HSBC just announces another write off of American loans in the amount of 51 million USD. In pounds this is 25.7 million. This huge write off is going to continue. In fact this amount is per day for write offs as the British bank tries to keep residents from defaulting on their loans, credit cards, and car financing.

The announcement has affected HSBC strongly in the market despite the overshadowing of the US subprime business. It seems there was a write off of 11.7 billion USD in the overall market. The write offs were a result of the loans being defaulted last year and the fact that the situation seems to be getting worse.

HSBC has increased their own write offs as a result of the US subprime mortgage industry, and to date the industry as a total, has written off 4.63 billion USD in the fourth quarter. There has been a steady increase over the past year from the start of 1.89 billion USD in the subprime market to what it is in the new year. The mortgage industry will be making some 12.5 billion in USD write offs in 2008.

HSBC commented that they are afraid worse may be in store. They are not sure if the worst has happened, or if a corner has been turned, and until the year continues they will still not have an answer for that question. The outcome of so many write offs in the American economy is going to be unemployment levels and housing prices. The unemployment will rise in the next year is something cannot be done to save the American based businesses that are now struggling. The housing prices have been declining since the mortgage industry took a turn, but this may not help the economy recover. People just aren’t looking to buy new homes or even allow the foreclosures to happen. A majority of Americans are trying to pay off their debts, but it may not be enough.

The writes offs that are increasing could affect the industry more than we would hope. There are some bonuses being given though. It seems that the new executive reward scheme will allow up to 400 percent of pay to the executives at the bank. These bonuses could bring further problems to the industry as a hole. Mr. Geoghegan was paid 3.5 million pounds last year and could earn as much as a 23 percent increase this year. These bonuses combined with the writes offs could affect those struggling in the economy.

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