Although it earned profits amounting to ¤12 billion last year, HSBC had lost ¤9 billion due to unsettled loans and credit. The US mortgage dilemma is said to have contributed much to the bad financial standing that HSBC credit card is now experiencing. It is no wonder then that it is one with the rest of the US banking institutions in resisting the credit card bill. HSBC has been experiencing losses due to the skyrocketing bad debt in the US. The negative performance of HSBC credit card line has lead to the institutions unpleasant profit standing. In order to cap this burgeoning problem, the bank needs an estimate of $6 billion dollars or ¤4 billion to finance the loss. The used-to-be banking giant admitted that its acquisition of Household nearly 6 years ago was indeed a major contributor for its spiraling status in the credit card market. Although it had US in the palm of its hand for the first few years, due to the sharp rise in bad debt that the company had to shoulder, it was toppled slowly off its pedestal and ceased most of its operations in the country. Even with the current situation with bad debts shouldered by American credit card companies that is predicted to even get worse by £7 billion in the next few months, HSBC wants to keep running operations amidst the countrys down-spiraling economy. On the other hand, according to Knight Vinke, one of HSBCs shareholders, there is no doubt that the bank should just drop all of its operations in the country as this would prove to be the best way to salvage whatever the bank has and keep it from sinking deeper into bad debt dilemmas. With the credit card bill putting all the stops to previous practices that worked for credit card issuers favor in the past in order to protect the rights of consumers from common bank abuses like sky-high interest rates, banks like HSBC are on a leash. While waging a battle to save its business operations in the US, HSBC credit card business must comply with stricter policies as stipulated in the bill. Will HSBC credit card be able to survive the volatile American credit card market? Will the credit card bill pull the last straw to HSBCs sour demise in the US? The answers to these questions all depend on the next move that HSBC is going to make. This is such a critical time that every decision can make or break the future of this banking institution.
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