Financial Market

This week major global bank HSBC announced new write-down figures as a result of their exposure to the sub-prime market.

It was reported yesterday that Europe’s biggest bank announced that it had written off £1.6bn in debt provisions for losses against mortgages, credit cards and other loans to U.S. consumers.

The write offs were lower than those in the last quarter of 2007 and were in line with predictions, however many the lower write off could have been due to seasonal factors such as tax refunds being used to repay debt rather than any underlying improvement.

“I don’t see [US] real estate prices changing from where they are now until well into 2009… We don’t think it is a spring 2008 event; we think it is a 2009 event.” - Michael Geoghegan, HSBC’s chief executive

With these latest write offs HSBC took its amount of write downs to £7.5bn over the past year, standing forth in terms of the largest write down figures behind Citibank, UBS and Merrill Lynch.

At the same time it was announced that a further $2.6bn was being written off in the company’s banking arm.

It has long been the case throughout the sub-prime mortgage crash that a strong Asian arm has helped to counter the hit taken on US home loans, meaning resulting profits were still higher than this time last year.

“I am encouraged by the way we have increased pre-tax profits in every one of the major countries in which we operate in Asia-Pacific, the Middle East and Latin America,” - Michael Geoghegan, HSBC’s chief executive