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Bank forecasts US recession
HSBC has forecast a bleak future for the US housing market and predicted that a recession in the US is almost unavoidable. HSBC had already written off $14 billion in bad debts from the American business since the fourth quarter of 2006. During the first quarter of the year it it lost $2.6billion from its US global banking and markets.
The banks chairman Stephen Green said "The outlook for the rest of the year remains unusually difficult to foresee in the current environment". He also said "The timing of any recovery in the US housing market, which is likely to be the primary stimulus in restoring confidence to the US economy. is also unclear."
HSBC acquired a large part of its sub prime borrowers when it bought Household International in 2003 at a cost of £9billion it then had to announce it was writing off $51 million in loans to borrowers in the US and it still has $150 billion, across 55 million people, in unpaid loans. However, HBOS shares still rose 1.94% to 883p and the bank reported that its profits from January to March were ahead of the first quarter of 2007.
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