Major Bank Gambled on Casinos

It came to light last week that former international banking organisation HSBC, now part of the government owned Lloyds Group has been a major stake holder in giving mortgages to the United State casino industry to the tune of $18.4bn at the height of the recent credit boom. 

The investments came to light last month when Sea Island, a US firm that was responsible for promoting executive holiday deals to Georgia declared itself bankrupt. The company was unable to meet payments on its $600 million (£374 million) in loans, of which a large percentage was owed to the HSBC. 

This revelation came in the same week that it was announced that the Lloyds Group had lost more than $500 million (£312 million) when they lent money to two casinos in Las Vegas, M Resort and MGM Resorts. When Penn National Gaming brought out the two casinos, they only paid a fraction of the loaned amount back to the British financial institution. Penn Gambling only paid $230.5 million, of the $1020 million that was originally lent by the HSBC. 

A recent report by Thomson Reuters showed that as much as 35% of the business accounted for in the US between 2004 and 2007 was within the gambling industry. The HSBC had a big stake in the Aztar Corporation, which went bankrupt in 2008 having secured loans to the value of $680 million (£424 million). Again when Station Casino filed for bankruptcy last year is was announced that HSBC was a major player in the gambling organisations debts.