The banking group said HSBC Finance Corporation would stop making new consumer loans and close down its 800 US branches in an effort to draw a line under the business, formerly known as Household, which it bought in 2003 and which has suffered large losses as a result of the US sub-prime mortgage meltdown.
“With the benefit of hindsight, the group wishes that it hadn't made this investment,” Michael Geoghegan, HSBC's chief executive, admitted yesterday. “But we are where we are and we believe that the majority of our shareholders expect us to collect these assets and move on.”
News of the rights issue, which entitles shareholders to buy 5 new shares for every 12 shares they own at 254p each, triggered a sharp fall in HSBC shares. They closed at 396.5p, down 94.5p, and below the 416p price at which the shares should theoretically trade once the rights issue has been completed.