All kidding aside, Steve, that's a great idea.  I'll bet it could be done.  I wish I was smart enough to figure out how to do it, but I'm not.  At the very least a class action would be required, I would think.

But yes, how much more private could personal info be?  If someone is using personal info as property, then of course the we own that property.  (oh, I think I need to read the fine print on my credit card agreements). 

Neoboho

In the absence of your explaining why, I don't think so.

Perhaps. But does it matter? Clearly putting aside the assets SAV is getting , if any, it's paying something for these accounts. And  doing that because it knows it will get that back from the profit it will make on them. And the sun rises in the east. I don't see that it makes much difference to Elizabeth's point whether that figure is $2300 per account or only half that (which would surprise me).

My hunch is that HSBC will collect the outstanding balances so what SAV will be getting is some data processing equipment and programs. Whatever the book cost (who cares?) I doubt whether its market value is more than a fraction of the purchase price.

We already know  credit card companies spend generously to attempt to capture new customers. Every day's mail shows that.. And clearly they lose money on the on-time payers(OTPs) so it's the slow payers who not only  cover the costs of those uncooperative OTPs  but  in addition generate the profits .

So , no surprise that SAV is paying a lot to get a customer list uncontaminated by OTPs .  Just those desperate , deep-in-debt sub primers who are the object of every cc company's affection. What else is new? Did I mention that the sun rises in the east?

"her analysis appears highly suspect"

Its worse than that. For me her post falls under the category of "are you that stupid or do you think I'm that stupid?".

SAV Credit was not buying individual accounts. They were buying credit card brands and the supporting operations.

http://uk.reuters.com/article/businessNews/idUKL3033574420071030

These were the British operations of the US based Household Finance, that HSBC had bought in 2003(?) Obviously, for SAV Credit, the asset is worth more than just the current number of card holders.

Jack

My hunch is that HSBC will collect the outstanding balances   .   .   .   .

 But then again, were Prof. Warren to say as much -- which she didn't -- we wouldn't be left to guess, now, would we. 

Clearly putting aside the assets SAV is getting , if any, it's paying something for these accounts.

Yes, but there's a big difference between paying $2300 per account and $100 per account, the latter hardly justifying the posting.

Presumably, HSBC wanted to clean up its balance sheet by removing some risky, difficult-to-value assets. And too, SAV Credit had access to funding -- the Royal Bank of Scotland and its own private equity partners -- which HSBC may not have had.

For all we know SAV Credit may have paid substantially less than book value for the HSBC assets it acquired. In the end we don't know how much SAV Credit did pay.

I don't know:-P, maybe the head line?

"HSBC sells Marbles credit card brand"

They were selling the brand get it?

Jack

Thought that might be your problem.

New rule!  Gotta read what the reporter wrote, not what the internet headline writer got out of it.

Elizabeth,

I hope you can answer this question for me because it's something I've never understood...

Obviously, HSBC sold its loan portfolios at a discount to the face value of the loans. Let's say they sold them at 80 cents on the dollar.

If I'm a borrower from HSBC, why am I not given the right or opportunity to settle the loan with a lump sum payment at the market discount price?

thosethingswesay.blogspot.com

Because the parties considered that a 20% discount applied to the face amount of the entire portfolio represented that asset's true value.

But destor23 has to pay the full amount, because his above average financial responsibility -- the likelihood, that is, that he'd repay his credit card balance in full -- was taken into account in setting the 20% discount.

Had destor23 and his well-known probity not to mention his innate honesty not been in the mix, the discount would likely have been -- oh, say 20.001%, maybe even 20.002%.

Here are some URLs that will help answer some of the questions being ask.

http://tinyurl.com/ytfajr

http://tinyurl.com/22zjvt

http://www.belfasttelegraph.co.uk/business/article3087716.ece

Jack

If I'm a borrower from HSBC, why am I not given the right or opportunity to settle the loan with a lump sum payment at the market discount price?

BTW: I think this option is available; In real-estate, if you send in a hardship letter, the bank might agree to a short sale if you provide credible evidence that it's either a short-sale or foreclosure and credit card companies, through consumer credit counselors, can reduce outstanding interest and late penalties. Based on my sense of people, if you're proactive enough to seek relief, you're probably proactive enough to manage your money well in the first place.

To boldly go...

They are not even close to a fair or mutually agreed upon contract.

It's fair because you're not forced to use it. There's so many alternatives. Perhaps you can start a non-profit which helps people switch to better financial products.

As Gandhi noted: "be the change you seek" and because the world is so corrupt, it's easy to find people who need help and if, since you're launching a grassroots movement, it can't be corrupted by the government and you can indeed tell people "straight up" and "without fear of being filtered" that corporate america is screwing them!

I used to have a BMI of 34; now it's down to less than 24 because I smartened up! Additionally, I just ordered some electronic components that I'll use to build a new device that I'll market to folks who need motivation.

To boldly go...

Hey CMS, you stated that your BMI has shrunk from 34 to 24. That is not good. A human's brain mass index will shrink as one gets older, but your decrease sounds serious. I would see a different Shrink, if I were you.

A human's brain mass index will shrink as one gets older, but your decrease sounds serious.

well, when people have a lot of crap on their minds, it does get heavy.

I would see a different Shrink, if I were you.

when one sees the light, they become the Shrink because everyone else wants a peaceful mind, not one filled with past crap.

To boldly go...

I'm really confused by the point of this post. Yes, SAV was founded to lend to the less credit worthy segment of the market (these people need credit, too, but lending to them is more risky - a different business model) Yes, HSBC sold off a part of its credit card business - presumably a part focused on the same market.

The introduction talks of how this sale demonstrates the profitability of lending to the less credit worthy, but there's never any further discussion of profit. The purchase price is stated, in total and on an average per account basis, but there is never any disclosure of the assets gained in the purchase. There is no factual basis in the post from which to discuss or imply profitability.

So, what's the point?

The news in this news is that HSBC, the largest bank in Europe is making moves to lower its portfolio risk and to minimize its exposure to downward asset evaluation. The present value of these assets is a function of, among other things, the expected default rate. That seems likely to go up for a number of reasons, lowering the value. But, the money to make these loans (credit card balances are loans) has, in recent years, come from selling certain types of securities. The balances owed and the income from interest (and fees) is considered an asset. Asset-backed securities are sold to fund more loans. These asset-backed securities are rated based on risk and return. While things were looking up in the world, investors were willing to buy the more risky ABS's because the return was high. As we entered the current 'correction', investors were no longer willing to take the risk and the market for the risker (and really all) ABS's dried up (no investors = no demand = oversupply = lower and lower prices for the securities: econ101). If you can't sell more of these securities, you can't raise more money to loan. It's no longer a good business for HSBC to be in. We don't know from the details released, but this was likely a fire sale to improve HSBC's overall financial picture.

The SAV deal was funded by RBS and "by its existing private equity partners". Someone obviously thought that, at a discounted price (and thusly discounted value on the books) that this now makes financial sense. SAV, RBS, and the partners likely have a different business model that doesn't depend on the sale of asset-backed securities to fund credit to the higher risk market. That would make this acquisition more of a core business for SAV than it was for HSBC. That should be good for everyone involved (it's more financially 'efficient').

Is there money to be made in the credit card business? Absolutely. Is that a bad thing? Not if you like using credit cards. Should companies make a higher percentage profit from lending to the less credit worthy segment of the market? Yes. If the risk is higher, the reward must also be. The alternative is that credit in the higher risk markets dries up and that isn't good for anyone.