HSBC to Take $4.6 Billion Subprime Writedown, Observer Reports

HSBC to Take $4.6 Billion Subprime Writedown, Observer Reports

May 11 (Bloomberg) -- HSBC Holdings Plc, Europe's biggest bank, tomorrow will announce a writedown of $4.6 billion linked to losses against mortgages, credit cards and other loans to U.S. consumers, the Observer reported, without saying where it got the information.

The writedowns will take the total amount of credit losses linked to the collapse of the U.S. subprime mortgage market at the London-based bank to almost $17 billion over the past 15 months, the British newspaper said today. HSBC may have to make writedowns totaling $15 billion this year, taking losses to $27 billion over two years, the Observer said, citing James Hutson, an analyst at Keefe Bruyette & Woods.

The world's biggest banks and securities firms have reported asset writedowns and credit losses of $323 billion linked to the collapse of the U.S. subprime mortgage market since the beginning of 2007. HSBC paid $15.5 billion for Household International Inc. in 2003, becoming one of the largest U.S. subprime lenders. The 142-year-old bank took $10.6 billion in loan losses across the company in 2006 and $17.2 billion last year.

HSBC will announce bad-debt charges at its U.S. business of $3.5 billion to $4 billion, the Sunday Times said today, citing no one. The bank will post a first-quarter loss of more than $1 billion at its American unit as a result of the charges, the Times said.

Richard Lindsay, a London-based spokesman for HSBC, declined to comment on the reports when contacted today by Bloomberg News.

Household

HSBC Chief Executive Officer Michael Geoghegan has replaced managers, closed mortgage units and stopped trading and selling mortgage-backed securities in the U.S. in response to the subprime collapse. Bad debts at HSBC's U.S. former Household unit may rise 27 percent to $15 billion this year, analysts at UBS AG said May 2.

The bank, which is scheduled to release a trading update at 9:15 a.m. London time tomorrow, has gained 2.9 percent this year in London dealing, the best performance in the eight-member FTSE 350 Banks Index, which has declined 8.7 percent.

BLOOMBERG

Vodafone to Bid $39 Billion for Africa's MTN, Sunday Times Says

Vodafone to Bid $39 Billion for Africa's MTN, Sunday Times Says

May 11 (Bloomberg) -- Vodafone Group Plc may offer 20 billion pounds ($39 billion) to take over MTN Group Ltd., Africa's largest mobile-phone company, the Sunday Times reported, without saying where it got the information.

Arun Sarin, chief executive officer of the world's largest mobile-phone company, told his acquisition team, led by former UBS AG banker Warren Finegold, to seek ways to buy Johannesburg- based MTN, the U.K. newspaper said. MTN Financial Director Rob Nisbet said today by mobile phone he wasn't ``aware'' of a bid.

A message left today by Bloomberg News on the mobile phone of Bobby Leach, spokesman for Newbury, England-based Vodafone, wasn't immediately returned.

Vodafone wants to expand in emerging markets to compensate for slowing growth in Europe. The company said on Jan. 31 it planned to build up operations in Africa by increasing its stake in Vodacom Group Ltd., South Africa's largest wireless provider. In the past two years, Vodafone has bought stakes in mobile operators in India and Turkey to tap faster-growing markets.

MTN said May 5 it was in talks with India's Bharti Airtel Ltd. that may lead to the biggest takeover in African history. Reliance Communications Ltd. and China Mobile Communications Corp. may also be interested in MTN, UBS AG analysts Suresh Mahadevan and John Slettevold wrote in a report the next day.

Mobile-phone operators are being lured to the potential growth in the company's markets. MTN has 68 million customers in Africa, Iran, Afghanistan and Syria, with a possible combined market of 240 million consumers by 2012.

Vodafone declined 0.9 penny, or 0.6 percent, to 161.8 pence on the London Stock Exchange on Friday, trimming the company's market value to 86 billion pounds. The stock has declined 14 percent since the start of the year.

BLOOMBERG