HSBC works off $20bn a year as it winds down Household in US

HSBC, Europe's biggest bank, is working off $20bn (£17bn) worth of loans per year in its US Household Finance unit as it winds down the business, the bank's chief executive said yesterday.

Household Finance Corp's liabilities stood at about $70bn, the chief executive, Michael Geoghegan, said in Hong Kong, ahead of the bank's annual shareholders meeting in London later this week.

The unit's run-off portfolio, which excludes its credit cards arm, was down from $78.9bn in loans and advances at the end of 2009 and $100.4bn at the end of 2008.

HSBC is running down its US consumer finance business after losing billions of dollars as loans soured during the sub-prime housing crisis. Earlier this month, the bank said that in the first-quarter bad debts fell to their lowest level in more than two years, led by a drop in the US.

HSBC expanded in the US when it acquired Household Finance Corp at the beginning of the credit boom in 2003 for $14.8bn, a deal that allowed the traditionally conservative lender to expand among US sub-prime borrowers. As the US economy deteriorated from 2006, HSBC began to pull back from US sub-prime borrowers and stopped originating home loans and car finance. The move left HSBC's main focus in the world's biggest economy on corporate and commercial business, private and premier banking, and its credit card business.

Separately, HSBC executives said they saw no changes in the bank's China expansion plans due to Beijing's efforts to cool China's economy, and also saw no increase in impairments from the eurozone debt crisis.

"Our major business is in the UK," said Mr Geoghegan. "And the UK economy is in better shape than the EU".