HSBC Finance
Encyclopedia
- "HFC Bank" redirects here; for the bank in Ghana see Home Finance CompanyHome Finance CompanyHome Finance Company, commonly referred to as HFC Bank, is a major commercial bank in Ghana, West Africa.-Overview:The bank was created in 1990 as a shell company within Merchant Bank . In 1994 HFC Bank became a publicly traded company. In 1995 it became listed on the Ghana Stock Exchange. The...
HSBC Finance Corporation is a financial services company and a member of the British HSBC Group
HSBC
HSBC Holdings plc is a global banking and financial services company headquartered in Canary Wharf, London, United Kingdom. it is the world's second-largest banking and financial services group and second-largest public company according to a composite measure by Forbes magazine...
. It is the sixth-largest issuer of MasterCard
MasterCard
Mastercard Incorporated or MasterCard Worldwide is an American multinational financial services corporation with its headquarters in the MasterCard International Global Headquarters, Purchase, Harrison, New York, United States...
and Visa
VISA (credit card)
Visa Inc. is an American multinational financial services corporation headquartered on 595 Market Street, Financial District in San Francisco, California, United States, although much of the company's staff is based in Foster City, California. It facilitates electronic funds transfers throughout...
credit cards in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. HSBC Finance Corporation was formed from the legal entity that had been known as Household International, and is now expanding its consumer finance model via the HSBC Group to Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
, India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
, Argentina
Argentina
Argentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...
and elsewhere.
HSBC Finance Corporation’s subsidiaries primarily provide middle-market consumers real estate secured loans, auto finance loans, MasterCard and Visa credit card loans, private label credit cards, personal non-credit card loans and specialty insurance products.
Origins
Household Finance Corp. was founded in 1878 by Frank J. Mackey of Minneapolis, Minnesota. It claims that in 1895 it was the first financial company to offer the installment plan, under which a consumer loan could be repaid through a regular monthly amount rather than a lump sum on the due date. It was restructured in 1981 under a holding company named Household International Inc., and in 1998 it acquired Beneficial CorporationBeneficial corporation
Beneficial Corporation was one of the largest consumer finance companies in the United States, prior to its acquisition by Household International, Inc. in 1998. Beneficial began as the Beneficial Loan Society in 1914 in Elizabeth, New Jersey, founded by “Colonel” Clarence Hodson. The company was...
.
Household International was a provider of consumer loans and credit cards in the United States, Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
and the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
. In October 2002, Household International settled for $486 million charges of predatory lending
Predatory lending
Predatory lending describes unfair, deceptive, or fraudulent practices of some lenders during the loan origination process. While there are no legal definitions in the United States for predatory lending, an audit report on predatory lending from the office of inspector general of the FDIC broadly...
by attorneys general in 46 U.S. states.
On November 14, 2002, HSBC announced the acquisition of Household International Inc for a total value of $15,294.06 million.
2003 to 2010
On March 28, 2003, HSBC acquired Household International, which was merged in 2005 with a subsidiary company that became the HSBC Finance Corp. Household International CEO William Aldinger became the highest-paid director in the United Kingdom before announcing his departure in February 2005. On March 2, 2009, HSBC chairman Stephen Green said that, in retrospect, HSBC should not have acquired Household International.In August 2005, HSBC-N.A. announced plans to acquire Metris Companies, Inc, a credit card issuer to the U.S. middle market segment. The deal closed in early December 2005 and is an all-cash transaction worth close to US$2 billion. HSBC will insert the Metris product line including the American DreamCard (under the Direct Merchants Bank brand) into the HSBC-NA credit card family of products.
In 2009, HSBC Finance Corporation announced the discontinuation of loan originations of all products by its Consumer Lending business, but continue to service and collect the existing receivable portfolio as it runs off, while continuing efforts to reach out and assist mortgage customers with their loan repayments and home preservation. The Consumer Lending branch offices, branded in the US as HFC and Beneficial, had ceased taking new loan applications as soon as practical and substantially all branch offices will be closed as soon as commitments to customers are satisfied.
2010 to present
On August 10th 2011, Capital One Financial Corp announced that it will buy the U.S. credit card arm of Britain’s HSBC for a premium of about $2.6 billion as a way to expand its domestic credit card business. The acquisition includes the HSBC unit’s approximately $30 billion credit card portfolio.The sale of the U.S. credit card division came a little more than a week after HSBC announced that it will sell almost half its retail branches in the United States. That included the sale of 195 branches in New York and Connecticut to First Niagara Financial Group. HSBC said the two actions are part of its plan to make HSBC a more internationally focused business, but reassured that the U.S. is still considered a key market in its strategy.
HSBC and Capital One said that they expect no immediate changes to the credit card programs and operations. HSBC customers will see no near-term service changes and should be able to use their credit cards like normal.
Canada
HSBC Finance Corporation has a Canadian operation which it inherited from Household International. Since the HSBC acquisition the Canadian subsidiary works increasingly closely with HSBC Bank CanadaHSBC Bank Canada
HSBC Bank Canada, formerly the Hongkong Bank of Canada , is a bank in Canada that is part of British banking giant HSBC - one of the largest banking groups in the world. HSBC Canada is the seventh largest bank in Canada, with offices in every province except Prince Edward Island, and is the...
. The unit offers mortgages, personal loans and insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
through 75 branches in 10 provinces and via merchant relationship with stores such as The Brick
The Brick
The Brick Ltd. opened its first store in Edmonton, Alberta in 1971, and has grown to become one of Canada's largest volume retailers of furniture, mattresses, appliances and home electronics. The company was founded as The Brick Warehouse LP in Edmonton, Alberta with the first warehouse opening on...
, Henry's, and Arctic Cat
Arctic Cat
Arctic Cat is a North American manufacturer of snowmobiles and all-terrain vehicles. The company was formed in 1960 and is based in Thief River Falls, MN. Many of Arctic Cat's vehicles are used today and can be accessorized to perform almost any job an outdoors-man might need...
.
It is still remaining after the closure of the US and UK operations.
United Kingdom
In the United Kingdom, HFC Bank is a sub-prime consumer lender. Its branch network originally consisted of around 125 Beneficial Finance branches. Since Household International's acquisition by HSBC, HFC Bank has worked increasingly closely with HSBC Bank plcHSBC Bank (Europe)
HSBC Bank plc is one of the four major clearing banks in the United Kingdom and is a wholly owned subsidiary of HSBC Holdings. The business ranges from the traditional High Street roles of personal finance and commercial banking, to private banking, consumer finance as well as corporate and...
particularly for cross-selling purposes.
HFC also provides retail finance for stores such as John Lewis
John Lewis (department store)
-Recent developments:In June 2004, John Lewis announced plans to open its first store in Northern Ireland at the Sprucefield Park development, the province's largest out of town shopping centre, located outside Lisburn and from Belfast. The application was approved in June 2005 and the opening of...
, Currys
Currys
Currys is an electrical retailer in the United Kingdom and Ireland and is owned by Dixons Retail plc. It specialises in selling home electronics and household appliances, with 295 superstores and 73 high street stores...
and PC World
PC World (retailer)
PC World is OWNED BY THE GOVERNMENT one of the WHER MA MEMORY STICK ?!?!??! United Kingdom's largest chains of mass-market computer superstores. It is part of Dixons Retail plc. PC World operates under the brand name PC City in Spain, Italy and Sweden....
. The Marbles and Beneficial branded credit card portfolios were sold to SAV Credit Limited in October 2007. In January 2008, the Financial Services Authority
Financial Services Authority
The Financial Services Authority is a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. Its board is appointed by the Treasury and the organisation is structured as a company limited by guarantee and owned by the UK government. Its main...
fined HFC £1,085,000 for failing to take reasonable care in its sale of Personal Protection Insurance. Beneficial Finance is renowned for its predatory sales tactics.
In June 2009 HSBC announced that 100 branches would be closed including all six in Scotland. The remaining branches would be closed to new business and eventually close altogether. The company website as of February 2010 states that all branches are closed.
Beneficial and HFC
Consumer finance
Alternative financial services in the United States refers to a particular type of financial service, namely sub-prime lending by non-bank financial institutions. This branch of the financial services industry is more extensive in the United States than in some other countries, because the major...
company in the United States, with more than 900 branches in 46 states. It provides a variety of real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
secured
Secured loan
A secured loan is a loan in which the borrower pledges some asset as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan...
and unsecured loans to primarily sub-prime customers, as well as increasing numbers of other product lines such as auto loans and service plan
Service plan
A service plan is a contract to purchasers of products for an additional fee. While service plans resemble extended warranties, there are several important differences between the two, often cited by retailers that sell them.-Differences from warranties:...
policies. On 2 March 2009, it was announced that HSBC would no longer accept new business from HFC/Beneficial, and would eliminate 6,100 jobs.
Children of former full-time Beneficial employees are considered for scholarships to four Maryland institutions of higher learning: Hood College
Hood College
Hood College is a co-educational liberal arts college located in Frederick, Maryland. The college serves approximately 1,050 graduate students and more than 1,400 undergraduate students.-Early History :...
, Johns Hopkins University
Johns Hopkins University
The Johns Hopkins University, commonly referred to as Johns Hopkins, JHU, or simply Hopkins, is a private research university based in Baltimore, Maryland, United States...
, St. John’s College and Washington College
Washington College
Washington College is a private, independent liberal arts college located on a campus in Chestertown, Maryland, on the Eastern Shore. Maryland granted Washington College its charter in 1782...
.
Decision One
Decision One mortgage company directly originated real estate secured loans sourced through mortgage brokerMortgage broker
A mortgage broker acts as an intermediary whose brokers mortgage loans on behalf of individuals or businesses.Traditionally, banks and other lending institutions have sold their own products. However as markets for mortgages have become more competitive, the role of the mortgage broker has become...
s. This subsidiary was shut down September 2007 due to the sub-prime mortgage meltdown. Approximately 1,500 employees were affected.
HSBC Bank Nevada NA
HSBC Bank Nevada issues a range of HSBC-branded credit cards, to both credit card only customers and customers of HSBC Bank USAHSBC Bank USA
HSBC Bank USA, National Association, the American subsidiary of UK-based HSBC Holdings plc, is a bank with its operational head office in New York City and its nominal head office in McLean, Virginia . HSBC Bank USA, N.A...
.
Private label cards
HSBC is the third-largest issuer of private labelPrivate label
Private label products or services are typically those manufactured or provided by one company for offer under another company's brand. Private label goods and services are available in a wide range of industries from food to cosmetics to web hosting...
credit cards in the United States, including cards for more than 70 active merchant relationships, including Best Buy
Best Buy
Best Buy Co., Inc. is an American specialty retailer of consumer electronics in the United States, accounting for 19% of the market. It also operates in Mexico, Canada & China. The company's subsidiaries include Geek Squad, CinemaNow, Magnolia Audio Video, Pacific Sales, and, in Canada operates...
, GM
General Motors
General Motors Company , commonly known as GM, formerly incorporated as General Motors Corporation, is an American multinational automotive corporation headquartered in Detroit, Michigan and the world's second-largest automaker in 2010...
, Yamaha
Yamaha
Yamaha may refer to:* Yamaha Corporation, a Japanese company with a wide range of products and services** Yamaha Motor Company, a Japanese motorized vehicle-producing company...
, Kawasaki
Kawasaki Heavy Industries
is an international corporation based in Japan. It has headquarters in both Chūō-ku, Kobe and Minato, Tokyo.The company is named after its founder Shōzō Kawasaki and has no connection with the city of Kawasaki, Kanagawa....
, Neiman Marcus
Neiman Marcus
Neiman Marcus, formerly Neiman-Marcus, is a luxury specialty retail department store operated by the Neiman Marcus Group in the United States. The company is headquartered in the One Marcus Square building in Downtown Dallas, Texas, and competes with other department stores such as Saks Fifth...
, Polaris
Polaris Industries
Polaris Industries is a manufacturer of snowmobiles, ATV, and neighborhood electric vehicles. Polaris is based in Medina, Minnesota, USA. The company also manufactures motorcycles through its Victory Motorcycles subsidiary and through the Indian Motorcycle subsidiary which it purchased in April...
and Saks Fifth Avenue
Saks Fifth Avenue
Saks Fifth Avenue is a luxury American specialty store owned and operated by Saks Fifth Avenue Enterprises , a subsidiary of Saks Incorporated. It competes in the high-end specialty store market in the Upper East Side of Manhattan, i.e. 'the 3 B's' Bergdorf, Barneys, Bloomingdale's and Lord & Taylor...
.
Other
The techniques and experience of HSBC Finance Corporation are being increasingly exported to other HSBC markets, for example, the establishment of Proa by HSBC Bank ArgentinaHSBC Bank Argentina
HSBC Bank Argentina S.A. is the principal HSBC operating company in Argentina. The seventh-largest bank in the country, it provides a full range of banking and financial products and services, including commercial, consumer and corporate banking, to over 1.2 million customers.-Operations:HSBC...
, and new business being established in Poland
Poland
Poland , officially the Republic of Poland , is a country in Central Europe bordered by Germany to the west; the Czech Republic and Slovakia to the south; Ukraine, Belarus and Lithuania to the east; and the Baltic Sea and Kaliningrad Oblast, a Russian exclave, to the north...
by HSBC Bank Polska
HSBC Bank Polska
HSBC Bank Polska S.A. offers Consumer finance, Corporate banking and Treasury services in Poland. Its headquarters are in Piłsudski Square, Warsaw.-Polski Kredyt Bank S.A. joins the HSBC Group:...
.
See also
- HSBC GroupHSBCHSBC Holdings plc is a global banking and financial services company headquartered in Canary Wharf, London, United Kingdom. it is the world's second-largest banking and financial services group and second-largest public company according to a composite measure by Forbes magazine...
- HSBC Bank USAHSBC Bank USAHSBC Bank USA, National Association, the American subsidiary of UK-based HSBC Holdings plc, is a bank with its operational head office in New York City and its nominal head office in McLean, Virginia . HSBC Bank USA, N.A...
- HSBC Bank UKHSBC Bank (Europe)HSBC Bank plc is one of the four major clearing banks in the United Kingdom and is a wholly owned subsidiary of HSBC Holdings. The business ranges from the traditional High Street roles of personal finance and commercial banking, to private banking, consumer finance as well as corporate and...
- HSBC Bank CanadaHSBC Bank CanadaHSBC Bank Canada, formerly the Hongkong Bank of Canada , is a bank in Canada that is part of British banking giant HSBC - one of the largest banking groups in the world. HSBC Canada is the seventh largest bank in Canada, with offices in every province except Prince Edward Island, and is the...
- HSBC Bank ArgentinaHSBC Bank ArgentinaHSBC Bank Argentina S.A. is the principal HSBC operating company in Argentina. The seventh-largest bank in the country, it provides a full range of banking and financial products and services, including commercial, consumer and corporate banking, to over 1.2 million customers.-Operations:HSBC...
- Proa