HSBC Sheds Auto Portfolio
Nearly two years after halting auto finance operations, HSBC Holdings has sold the last $2.9 billion of auto loans in its portfolio.
HSBC sold the portfolio, in run-off mode, to an undisclosed buyer for $2.7 billion. The London-based financial conglomerate had sold another $1 billion portfolio, plus servicing operations, to Santander Consumer USA last November.
Reduced exposure to auto losses contributed to the profit recorded by HSBC’s North American operations in the second quarter. The unit earned $492 million, compared with a loss of $3.7 billion in 2Q09, and bad-loan charges dropped to $4.6 billion from $8.5 billion.
Yet despite the full-fledged exit from auto finance, HSBC said today that it would start “gently growing” its consumer finance business. For now, growth will come in the credit card sector, as HSBC stopped originating mortgages along with auto loans in 2008.
But how long will it be before the company returns to the auto finance space? My guess: two years.
What’s your guess?
