HSBC to close U.S. mortgage-backed securities desk

NEW YORK (Reuters) - Europe's biggest bank HSBC Holdings (HSBA.L) O005.HK said it had stopped selling and trading mortgage-backed securities in the United States, as part of 120 job cuts in its investment bank unit on Thursday.

A spokesman at the bank's headquarters in London said 100 of the job cuts are mostly a result of it closing its U.S. mortgage desk, which managed transactions in mortgage securities issued by Fannie Mae and Freddie Mac.

Firings included trading chief Richard Lightburn, and Russell Middleton, a charismatic trader who was among those poached from Bear Stearns Cos. in 2005, according to sources at other Wall Street investment banks in New York.

An HSBC spokesman in New York did not return phone calls.

HBSC will also cease investment bank coverage of the healthcare sector in the United States, the spokesman said. The other job cuts will be in Britain.

The decision to cease MBS trading comes after HSBC closed its U.S. subprime mortgage unit Decision One in September, and before that stopped buying subprime loans originated by other lenders, as the U.S. subprime housing crisis deepened.

Middleton, known across the industry for dry wit and humor-laced commentaries on the $4 trillion "agency" MBS market, wrote a swan song to the tune of "My Favorite Things" from the musical The Sound of Music.

"It might be December ... before my head hunter rings and then I won't feel so bad!" rang his lyrics, obtained by Reuters in an e-mail.

(Reporting by Steve Slater and Al Yoon, Editing by Diane Craft)