HSBC Exits US Mass Market Retail Banking; Strategically Repositions US Retail Bus. Towards International Banking & Wealth Man...
May 26 2021 - 6:50PM
Business Wire
*** Transactions agreed with Citizens Bank and
Cathay Bank, pending regulatory approval ***
*** HSBC will continue investing in US
international wholesale banking franchise ***
HSBC Holdings plc (‘HSBC’) today announces that it will exit its
US domestic mass market retail banking business through several
transactions, pending regulatory approval. They include:
- Exiting 90 branches out of a current branch network of 148
branches
- HBUS will retain a small network of physical locations in
existing markets which will be repurposed into 20-25 international
wealth centres
- Remaining branches, between 35-40, will be wound down
- Exiting all Personal, Advance and certain Premier banking
customers (those with balances below US$75k)
- Exiting all retail business banking customers (small businesses
with turnover of US$5m and under)
As a result, HSBC Bank USA, N.A. (‘HBUS’) will reposition its US
Wealth and Personal Banking business to focus on the banking and
wealth management needs of globally connected affluent and high net
worth clients. HBUS will exit its domestic mass market retail
banking business and retail business banking (collectively the
‘Business’) through a number of divestitures, and wind-down of the
residual branch network. HBUS has entered into sale agreements,
subject to regulatory approval, with Citizens Bank and Cathay Bank
for certain parts of the Business.
Noel Quinn, Group Chief Executive of HSBC, said:
“We are pleased to announce the sale of the domestic mass market
of our US retail banking business. They are good businesses, but we
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. This next chapter of HSBC’s presence in the US
will see the team focus on our competitive strengths, connecting
our global wholesale and wealth management clients to other markets
around the world.”
Highlights from transactions:
- Citizens Bank has entered into an agreement to purchase the
East Coast domestic mass market and retail business banking
businesses as well as the online bank portfolio, including 80
branches and approximately 800,000 customer relationships with c.
US$9.2bn in deposits and US$2.2bn of outstanding loans as at 31
March 2021.
- Cathay Bank has entered into an agreement to purchase the West
Coast domestic mass market and retail business banking businesses,
including 10 branches and approximately 50,000 customer
relationships with US$1.0bn in deposits and US$ 0.8bn of
outstanding loans as at 31 March 2021.
- HBUS will retain a small network of physical locations in
existing markets which will be repurposed into 20-25 international
wealth centres to serve our core international customer base of
c.300k affluent and high net worth customers (out of a historical
base of c.1.4m). We will wind down the residual branches, between
35-40, not subject to sale or repurposing.
Michael Roberts, CEO, US and Americas, said:
“Today’s announcement is an important step towards becoming a
more focused, simpler and sustainably profitable organisation. A
strong, internationally connected US business is an important part
of HSBC’s value proposition, and we are excited to be focusing the
US business in areas of competitive strength. At the same time, I
am very pleased that we were able to execute this strategic
repositioning at pace. It was also important for us to find buyers
who would be a good fit for our customers and employees.”
HSBC announced earlier this year that it was exploring strategic
options with respect to its US retail franchise, including organic
and inorganic options to improve the profitability of its US retail
business. The announced transactions are expected to close by the
first quarter of 2022, subject to regulatory approvals. We expect
US$0.1bn of pre-tax costs to be incurred in connection with these
transactions after which HSBC does not expect to generate a
significant gain or loss. The risk weighted assets (on a PRA basis)
associated with the announced transactions were c.US$1.8bn at 31
March 2021 and no material impact is expected on the Group’s CET1
ratio.
The Business is part of our US Wealth and Personal Banking (‘US
WPB’) operations. US WPB had reported net operating income for 2020
of US$1.0bn. At 31 March 2021, US WPB had loans and advances to
customers of US$23.8bn, customer accounts of US$47.8bn and risk
weighted assets of US$15.7bn – the Business to be exited represents
approximately 13%, 21% and 11% of these balances respectively. The
balances remaining as continuing US WPB operations represent
Premier, Jade and Private Banking customers. Further analysis of
the results of our US WPB business are provided in the HSBC
Holdings plc Data pack 1Q 2021.
For more details, please visit
www.about.us.hsbc.com/movingforward
Notes to editors:
1. HSBC USA
HSBC Bank USA, National Association (HSBC Bank USA, N.A.) serves
customers through retail banking and wealth management, commercial
banking, private banking and global banking and markets segments.
It operates bank branches in: California; Washington, D.C.;
Florida; Maryland; New Jersey; New York; Pennsylvania; Virginia;
and Washington. HSBC Bank USA, N.A. is the principal subsidiary of
HSBC USA Inc., a wholly-owned subsidiary of HSBC North America
Holdings Inc. In the United States, deposit products are offered by
HSBC Bank USA, N.A., Member FDIC, investment and brokerage services
are provided through HSBC Securities (USA) Inc., (Member
NYSE/FINRA/SIPC) and insurance products are provided through HSBC
Insurance Agency (USA) Inc.
2. HSBC Holdings plc
HSBC Holdings plc, the parent company of HSBC, is headquartered
in London. HSBC serves customers worldwide from offices in 64
countries and territories in its geographical regions: Europe,
Asia, North America, Latin America, and Middle East and North
Africa. With assets of US$2,959bn at 31 March 2021, HSBC is one of
the world’s largest banking and financial services
organisations.
3. A formal US Securities and Exchange Commission filing
under Form 8-K will be made available on the HSBC investor
relations website at www.about.us.hsbc.com/investor-relations/hsbc-usa
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version on businesswire.com: https://www.businesswire.com/news/home/20210526006149/en/
Media enquiries to: Heidi Ashley +44 (0) 7920 254057
heidi.ashley@hsbc.com Rob Sherman +1 646 939 6998
robert.a.sherman@us.hsbc.com Investor enquiries to: Richard
O’Connor +44 (0) 7909 873681 richard.j.oconnor@hsbc.com
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