HSBC has sold its US retail banking network, effectively bringing to a close its struggling North America business after a 40-year attempt to run a full-service bank in the country.
Europe’s largest lender first considered a disposal of its consistently lossmaking American division late last year as part of the bank’s efforts to make deep cost savings of about $4.5bn and cut 35,000 jobs.
HSBC said on Thursday it had sold 80 of its 148 branches on the east coast to Citizens Bank, which has also acquired $9.2bn of deposits and $2.2bn of outstanding loans. Ten branches on the west coast have been purchased by Cathay Bank, which has taken over $1bn of deposits and $800m of loans. The remaining branches will be wound down.
HSBC said it would not generate a “significant gain or loss” from the deals with Citizens Bank and Cathay Bank, other than incurring $100m in costs on the transaction.
The lender, which made the bulk of its profits in Hong Kong, said it would retain “a small network of physical locations” in the US following the disposal. These would become “international wealth centres” for its private banking and wealth management customers, most of which were in Asia.
The sales are the latest stage of a far-reaching programme to redeploy $100bn of risk-weighted assets from underperforming businesses in Europe and the US to Asia, particularly in wealth and asset management. In February, HSBC said it would further expand its fee-generating wealth management business in Hong Kong and mainland China, where it will invest $3.5bn and hire more than 5,000 advisers.
The sale of the US network aligns the bank’s fortunes more closely with China. HSBC has been used as a political piñata in recent years as tensions have risen between Beijing and Washington.
Noel Quinn, HSBC chief executive, said the bank was exiting the US mass market because it “lacked the scale to compete”.
“Our continued presence in the US is key to our international network and an important contributor to our growth plans,” he said.
Greg Hingston, head of wealth and personal banking for Asia Pacific, said: “The US plays a large role in HSBC’s Asia growth strategy. Our refreshed strategy in the US will allow us to better serve the needs of our international wealth clients, who continue to consider the US for international education, property, investment diversification, career and family mobility and business expansion, among others.”
HSBC closed 80 of its US branches last year, leaving it with a fraction of the network of rivals such as JPMorgan and Bank of America. Insiders argued the division’s lack of scale made it harder to turn it round, particularly during the coronavirus crisis and a period of ultra-low interest rates that have forced it to hunt for higher margin fees.
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2021-05-27 02:16:04Z
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