Posted by RESPA Dog

Feb. 8 (Bloomberg) — HSBC Holdings Plc Chief Executive Officer Michael Geoghegan will shake up management and change lending policies after the bank’s losses from bad home loans in the U.S. increased.

HSBC is setting aside $1.76 billion, 20 percent more than analysts estimated for bad-loan provisions in 2006, because the U.S. mortgage business is worsening, it said late yesterday. Shares of Europe’s biggest bank today dropped the most in eight months.

“The buck stops with me,'’ Geoghegan said today at a press conference in London. “We will resolve it.'’ He wouldn’t say whether HSBC will need to raise bad-debt provisions again in 2007.

Earnings growth at HSBC, the world’s third largest lender, has trailed global rivals including Bank of America Corp. and JPMorgan Chase & Co. HSBC spent $15.5 billion in 2003 to buy Household International Inc., which makes loans to U.S. consumers with poor credit records. Investors have criticized Chairman Stephen Green and Geoghegan for hurting HSBC’s stock with the Household takeover.

“I am responding, and more action will be taken,'’ Geoghegan said. “This is a problem, we have taken the severity on board.'’

Among the planned changes, HSBC U.S. Group Executive Brendan McDonagh will take a bigger role at the finance company, HSBC Finance Corp., Geoghegan said today. The Prospect Height, Illinois- based unit has been run by Bobby Mehta.

HSBC will also seek to make loans to immigrant communities from Asia and Eastern Europe in Texas and Florida, Geoghegan said. HSBC management made the mistake of “going for volume'’ and selling second lien, or second charge mortgages, he said.

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