HSBC appoints U.S. CEO

HSBC Holdings Plc., Europe's largest bank, Thursday named Brendan McDonagh chief executive officer of its North American unit in Prospect Heights.

Battered by mounting losses stemming from the U.S. subprime meltdown, HSBC North America is also in the midst of a move of thousands of workers to a new headquarters in Mettawa.

HSBC may need to add $13 billion to bad loan provisions for subprime lending in the U.S., Goldman Sachs Group Inc. analysts Roy Ramos wrote in a note last month. HSBC has ousted managers and cut lending in the U.S. to control bad loans and is focusing on emerging markets.

The top position had been vacant since last February. HSBC CEO Michael Geoghegan that month ousted Bobby Mehta after a surprise jump in soured loans, including at the company's HSBC Finance consumer finance unit.

Dublin, Ireland, native McDonagh, 49, replaced Mehta as chief executive of HSBC Finance, and has also since been chief operating officer of HSBC North America. McDonagh joined HSBC in 1979.

Niall Booker, 49, will succeed McDonagh in both jobs. He had been chief operating officer of the consumer finance business since last March. Booker joined HSBC in 1981.

"Michael Geoghegan is taking a close, personal interest in HSBC Finance, and it's No. 1 on his list of priorities," said Alex Potter, a banking analyst at Collins Stewart in London. "It's good to see him install heavy-hitters."

HSBC was among the first major lenders to reveal mounting credit losses as consumers became overextended from easy credit and housing prices began to fall.

Credit and liquidity problems have since mushroomed industrywide. These have resulted in billions of dollars worth of write-downs and losses, affecting such companies as Citigroup Inc., Merrill Lynch & Co. and UBS AG.

HSBC in September decided to close its U.S. subprime lending unit, Decision One Mortgage, cutting 750 jobs.