The Sunday Times reports that HSBC's proposed $14bn takeover of Household International is in danger of hitting the skids due to a number of outstanding lawsuits totalling $8bn.
The British based bank is hoping that Household, America's biggest lender to customer's with a poor credit history, will increase its profile across the Atlantic. HSBC, founded in 1865 and currently 'the world's biggest bank' operating in 81 countries, has yet to conquer the States.
Yet the purchase will not come without difficulty. Consumer group the Association of Community Organisations for Reform Now (Acorn) has three outstanding suits against Household totalling $8bn for so-called 'predatory lending' practices - in other words, ripping off clients with a bad credit history who couldn't borrow from any other source. The business has been accused, even by its own shareholders, of making 'materially false and misleading statements.'
A spokesman for Acorn confirmed last week that HSBC would be pursued should the takeover proceed. It is also believed that a takeover by a bank with deep pockets might actually encourage others to initiate legal proceedings.
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