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To: patron_anejo_por_favor who wrote (348463)	11/13/2007 6:23:28 PM
From: ldo79	Respond to of 436258

opps - forgot to mention this....as the markets get jammed.... `Real Threat' HSBC stopped selling and trading mortgage-backed securities in the U.S., it said last week. The five-month rout in the $6 trillion market for U.S. home-loan bonds has triggered about $45 billion in writedowns among U.S. investment banks including Citigroup Inc. and Merrill Lynch & Co. ================================================ HSBC's U.S. Bad Debts Probably Rose in Third Quarter (Update1) By Ben Livesey and Jon Menon Nov. 13 (Bloomberg) -- HSBC Holdings Plc, Europe's biggest bank by market value, may say third-quarter bad loans in the U.S. almost doubled as higher interest rates triggered defaults on adjustable-rate mortgages. U.S. loan-loss provisions for the three months ending Sept. 30 may rise 83 percent to $2.52 billion, according to the median of three estimates compiled by Bloomberg for provisions at HSBC Finance Corp., the subprime consumer-finance unit based in Prospect Heights, Illinois. HSBC ousted managers and closed units selling subprime mortgages this year in the U.S. after rising defaults. The U.S. unit, which had pretax profit of $878 million in the third quarter last year, probably will show a quarterly loss of $492 million when it reports tomorrow, according to Credit Suisse Group, which has a ``neutral'' rating on the shares. ``More people have defaulted than they were anticipating, and house prices have fallen more than they expected,'' said Simon Maughan, a London-based analyst at MF Global Securities Ltd. He estimates U.S. bad loans rose to $3.2 billion in the third quarter and has a ``neutral'' rating on the stock. HSBC shares, which fell 0.8 percent to 842.5 pence in London, have held up better than most European bank as the collapse of the U.S. subprime mortgage market forced writedowns and cut into earnings. HSBC is down 9.5 percent this year, compared with a 15 percent decline for the Bloomberg Europe Banks and Financial Services Index and the 20 percent drop for the FTSE All-Share Banks Index. The bank set aside an extra $1.8 billion in March to help cover U.S. loans that may deteriorate this year. HSBC Finance had a pretax profit of $76 million in the second quarter of this year. About $5 billion of the company's adjustable-rate mortgages will reset with higher interest rates in the second half, less than the $8 billion previously projected, Finance Director Douglas Flint said July 30, when the bank reported first-half results. `Real Threat' HSBC stopped selling and trading mortgage-backed securities in the U.S., it said last week. The five-month rout in the $6 trillion market for U.S. home-loan bonds has triggered about $45 billion in writedowns among U.S. investment banks including Citigroup Inc. and Merrill Lynch & Co. Morgan Stanley estimates HSBC's third-quarter loan-loss provisions in the U.S. will rise to $2.4 billion. ``The real threat to numbers is the $49 billion branch- originated subprime real estate book and the remaining $83 billion of unsecured personal debt,'' said Michael Helsby, a London-based analyst at Morgan Stanley in a Nov. 9 note to clients. He rates the shares ``underweight.'' tinyurl.com