HSBC sells US residential mortgage loan portfolio

HSBC Holdings has sold a portfolio of predominantly US second lien residential mortgage loans to DLJ Mortgage Capital, which is a wholly-owned subsidiary of Credit Suisse, for $1.5bn.

The proceeds will be used to pay down long-term debt and for general corporate purposes.

HSBC said the disposal is part of the ongoing reduction of its US consumer mortgage loan business and is in line with its strategy to sell substantially all of HSBC Finance Corporation's residential mortgage loans.

The carrying value of the loan portfolio as at 31 December 2016 was $1.5bn and the gross assets stood at $1.64bn.

The disposal is expected to generate a pre-tax loss on sale, after associated costs, of around $51m.

Second lien debt refers to loans that are reimbursed only after loan balances on senior debts are repaid in full following a default.

At 1445 GMT, HSBC shares were flat at 665.10p.