Business & Finance
Household International Inc., the US's second-largest consumer finance company, agreed to be bought by British banking giant HSBC Holdings. The all-stock deal, valued at $14.2 billion, will give HSBC almost 1,400 new outlets in the US and an estimated 50 million additional customers, many of them borrowers with low incomes or troubled credit histories. Prospect Heights, Ill.-based Household agreed last month to pay up to $484 million in restitution to borrowers in 44 states for allegedly misleading them into paying higher-than-advertised interest rates.
Massive losses were reported by three of the largest white-collar companies in Europe. Deutsche Telekom, the German phone-service provider, posted a net deficit of $24.7 billion for the first nine months of its business year, blaming the red ink on the cost of third-generation licenses for cellphones and the write-downs of such acquisitions as Bellevue, Wash.-based VoiceStream Wireless Corp., since renamed T-Mobile USA. Meanwhile, Allianz, the German insurance and financial services giant, reported a $2.5 billion third-quarter loss, blamed, in part, on settling asbestos-related claims. And Credit Suisse said it lost $1.4 billion in the third quarter, the worst in its 146-year history. Senior executives said much of the problem was due to an "absolutely unacceptable" performance by the company's US subsidiary, First Boston, which will be ordered to implement a $500 million cost-cutting program.
An alliance that stops just short of a merger was formed by Nippon Steel Corp., the world's third-largest producer, and two rivals. It and smaller Japanese companies Sumitomo Metal Industries and Kobe Steel Ltd. agreed to a mutual stockholding arrangement, to supply each other with products that are their respective specialties, and to cooperate in distribution and the buying of raw materials. Japan's second- and third-largest steelmakers, NKK Corp. and Kawasaki Corp., set up a joint holding company in September.
AMP Ltd., the largest financial services and life insurance company in Australia, said it will cut 1,200 jobs and scale back or cease its Asian operations, banking services in Britain, and some credit-card programs.