Britain's largest bank, HSBC, has written off $17.2 billion in bad debt after the U.S. housing market slide hit the value of its loans in 2007. The annual loss is the largest reported amongst Britain's big five mortgage lenders. For VOA, Tom Rivers in London reports.
The record HSBC write off is larger than the next four British banks combined.
HSBC Chairman Stephen Green admits the global financial system had come under what he calls 'extreme strain' in 2007.
As to 2008, he says the outlook is uncertain, but he warns the economic slowdown and the credit difficulties in the United States may get worse before getting better.
Despite the massive write down due to the U.S. credit problems, gains elsewhere around the world kept HSBC in profit.
Market analyst David Buik from the London brokerage firm BGC Partners says wise choices outside of the U.S. more than covered the debt damage.
"Strong in Asia; China, India and also other emerging nations and a terrific presence in the United Kingdom as well and this is why unlike the other banks, particularly Royal Bank of Scotland and to a lesser degree Barclays, they produced such a stellar set of number for the second half of the year where profits were up by 17 percent," he said. "Whereas everybody else has been scuttling around trying to work out these provisions for bad debt, HSBC has done that but despite it, managed to do very well."
For the year in total, HSBC profits rose 10 percent to $24.2 billion.
Given the problems in the U.S. market, HSBC is restructuring its operations there. It has reduced the amount of credit it extends and it is closing about 400 of its U.S. branches.
In other banking news, Britain's Barclays Bank announced Monday that it has agreed to buy Russia's Expobank for $745 million. Expobank has 32 branches mostly in Moscow and St. Petersburg. Subject to regulatory approval, the deal is expected to be completed by midyear.