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Regulatory sanctions in US ‘embarrassing’: HSBC global head

Regulatory sanctions in US ‘embarrassing’: HSBC global head
PTI
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First Published: Wed, Mar 02 2011. 05 44 PM IST
Updated: Wed, Mar 02 2011. 05 44 PM IST
New Delhi: UK-based HSBC on Wednesday said regulatory sanctions being faced by the bank in the US is “embarrassing” and would have a bearing on its image.
“Not positive... it’s disappointing,” HSBC Holding Plc Group Chairman Douglas J Flint told reporters when asked whether findings of the US regulator on foreclosures would have impact on its image.
HSBC has stopped repossessing homes of defaulting borrowers in the US after regulatory authorities - Federal Reserve Board and the Office of the Comptroller of the Currency - identified deficiencies in the bank’s processes.
In a regulatory filing with Securities and Exchange Commission yesterday HSBC had said “we have suspended foreclosures until such time we have substantially addressed the noted deficiencies in our process.”
“I think it is embarassing...some of it is very very technical,” Flint said, adding there could be some fine on the bank.
“The industry is facing regulatory sanctions, which mean a fine. I don’t know what that will be...The real cost of that is not going to be fine or other thing, rather the fact that there would be backlog of foreclosures in US (that) we are going to have”, he said.
The prices of properties in the US, he said, could witness “deterioration as four-five-six months of volume is released at the same time”.
Besides HSBC, several other mortgage services including Bank of America Corp., JP Morgan Chase & Co. and Wells Fargo & Co. have been subjected to regulatory review by the US authorities.
“We are the ninth biggest (player) and we are very different from others in many respects because, we, by and large, develop our servicing in terms of our contracts... but there were deficiencies across the industry,” he added.
When asked if the Middle-East crisis has hit its operations, HSBC’s global head said “we have nothing in Libya, we have big operation in Egypt that is okay...Egypt seems to be stabilising now”.
“The bigger risk” would be rising oil prices, he said, adding the bank was having large operations in several parts of the Gulf region.
The crude oil prices in the international market is hovering above $100 a barrel and it is feared that worsening crisis in some Gulf countries may harden the prices even further.
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First Published: Wed, Mar 02 2011. 05 44 PM IST