HSBC to Write Off $11 Billion as NETeller Customers Contemplate Suit

EUROPE’s biggest bank, HSBC, is to write off $11 billion to cover mounting losses in its troubled American offshoot, HSBC Finance Corporation.  This according to a report featured in Sunday's Times of London.

HSBC’s US business has faced escalating losses from thousands of low-income families who have been unable to repay loans. But the scale of its write-off, largely linked to the US business, will surprise many investors, the report says. 

HSBC is also taking some heat for conducting business with third party online payment processor, NETeller, which catered exclusively to the internet gambling industry.  Two co-founders in that company were arrested and face trial on various charges ranging from racketeering to money laundering.  Even worse, NETeller refuses to pay some millions of dollars owed to US gamblers.

Affected customers have joined forces to consider legal remedies against NETeller.

"On the lawsuit front there are players with deposits totaling 130K willing to join the suit after one week," a representative for those owed money by NETeller told Gambling911.com Monday.

Affected NETeller customers have not ruled out naming HSBC in any potential lawsuit, though the chances of this happening are probably less likely. 

"No longer should NETeller be aloud to hide behind A governmental inquiry and allegations that HSBC has refused to do business with them. Why is no one talking class action lawsuit? these people have de-frauding innocent Americans. I think US account holders could potentially maintain several causes of action against both of these companies. HSBC has numerous assets in the United States and is publicly traded.

"The pressure from a large public lawsuit has the potential to get their attention, at the very least. We are talking about tens of millions of dollars here. Have these people lost their minds? I am sick of waiting and reading about what may happen in the future, I want to pursue suing these people in Federal Court. They cannot be allowed to skate like this."

Shares in HSBC closed the week at 886p — 10p off their low for the past 12 months— valuing the company at £102 billion.

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Christopher Costigan, Gambling911.com

Originally published March 5, 2007 11:33 am ET