HSBC to close Indiana mortgage office

Wed Aug 22, 2007 8:49am EDT

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(Adds details on HSBC U.S. restructuring, byline)

By Tim McLaughlin

NEW YORK, Aug 22 (Reuters) - The U.S. mortgage unit of HSBC Holdings PLC (HSBA.L) said on Wednesday it will close an office in Indiana, a move that will affect about 600 workers, amid a severe downturn in U.S. credit and housing markets.

Escalating defaults on U.S. home loans have shaken financial markets worldwide, forcing HSBC, Europe's biggest bank, to restructure its U.S. mortgage operations and set aside $1.7 billion for loan losses in the first quarter. A prolonged U.S. housing slump has resulted in nearly 88,000 job cuts in the financial services sector, consulting firm Challenger, Gray & Christmas Inc. said this week.

London-based HSBC will close the office in Carmel, Indiana, by the end of the second quarter of 2008, company spokesman Michael Trevino said. The jobs affected include sales and underwriting positions.

HSBC Finance has been one of the largest providers of risky subprime loans in the United States. Investors are worried HSBC will rack up more mortgage-related losses in the second half of this year when several billion dollars worth of those loans reset at higher interest rates amid a slumping U.S. housing market.

Earlier this year, HSBC consolidated operations within its Decision One wholesale mortgage operation, which relies on independent brokers to find borrowers. Loan processing and underwriting functions were centralized and the number of operating centers was reduced to two from 17.

Trevino said the Indiana workers will be offered a chance to apply for other jobs within HSBC, which employs about 60,000 people in the United States. Severance packages also will be offered, he said.

(Reporting by Tim McLaughlin)

((Editing by Dave Zimmerman; Reuters messaging: tim.mclaughlin.reuters.com@reuters.net; +1 646 223 6033)) Keywords: HSBC JOBS/

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