HSBC confirms no exposure to the collapse of First Brands Group

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HSBC has escaped the financial wreckage caused by the collapse of First Brands Group, a bankrupt auto-parts maker that’s left several Wall Street banks counting heavy losses, according to Bloomberg. On Thursday, HSBC confirmed that it had no exposure at all to First Brands’ failed financing deals, a rare case of staying clean while others are knee-deep in trouble. Michael Roberts, the bank’s head of corporate and institutional banking, said during a Thursday interview that HSBC was not involved in any way with First Brands. “We were not involved directly in First Brands and don’t know how much due diligence was done,” Roberts said. He warned that fraud cases in the industry are rising fast, adding that banks have to improve their background checks. “You’re going to have to respond by being much better on due diligence,” said Roberts. HSBC is now expanding a fraud-detection system across its business units, with a technology that was originally built for trade finance, but Roberts said it’s being applied more widely to detect suspicious funding. “These types of financing arrangements are going to require much more due diligence, much greater technology, much more understanding of what you are financing,” HSBC’s Roberts said. “I am more concerned and it’s something we’re very focused on.” Wall Street faces losses as HSBC tightens fraud controls While HSBC stands clear, JPMorgan Chase is cleaning up damage from a different corner of the market. Chief Executive Officer Jamie Dimon told investors this week that the bank took a $170 million charge linked to Tricolor Holdings, a subprime auto lender. According to Jamie, failures like those of Tricolor and First Brands could mean there are deeper issues. “When you see one cockroach, there are probably more,” he said. “Everyone should be forewarned on this one.” Jamie admitted the hit…