HSBC, Europe’s largest bank, reported a 70 percent drop in profits in 2008 and now they are trying to raise $17.7 billion while cutting 6,100 U.S. jobs.
Link to MSNBC Article
Due to the weakness of the U.S. market, HSBC said it will scale back its consumer lending operations there — shutting down its HFC and Beneficial brands, causing a loss of 6,100 jobs.
“Management believes it will take years before property values return to the levels seen prior to the decline and, as such, has concluded that recovery in the sub-prime mortgage lending business is uncertain and the industry is unlikely to stabilise for a numer of years,” HSBC said.
HSBC shares plunge, dragging Hong Kong down Tuesday
Hong Kong shares were hit hard Tuesday, weighed down by a plunge in HSBC Holdings, a day after the market heavyweight said it will raise $17.7 billion from shareholders in the wake of a 70% drop in profit.
In addition to a reporting a sharp drop in 2008 profit and a large rights share issue, HSBC also slashed its dividend Monday and said it'll shutter the branch network of its HSBC Finance arm in the U.S., leaving only the credit card business to continue operating.
"There is nothing positive right now. ... Overall market sentiment is turning much weaker than before and there are concerns about the length of the global recession," said Pang.
Monday, HSBC shares tumbled 18.8% in London after the announcements, while its American Depository Receipts also dropped by a similar margin in New York.