HSBC to Exit Most U.S. Retail Banking -- Update
May 27 2021 - 12:24AM
Dow Jones News
By Kimberly Chin and Frances Yoon
HSBC Holdings PLC will stop serving mass-market individual
customers and smaller businesses in the U.S., as the bank shifts
its focus to wealth management and international banking,
especially in Asia.
The bank said late Wednesday that it will sell 90 of its 148
branches in the U.S., and plans to wind down another 35 to 40. HSBC
agreed to sell parts of its business to two U.S. regional banks,
Citizens Financial Group Inc.'s Citizens Bank and Cathay General
Bancorp's Cathay Bank.
HSBC will retain around two dozen locations and convert the
sites into international wealth centers, it said. That would help
the bank focus on the "banking and wealth-management needs of
globally connected affluent and high-net-worth clients," it added.
It will go from about 1.4 million customers to roughly 300,000.
As such, the bank will no longer service customers with balances
below $75,000. It will also cut ties with all of its
retail-business banking customers, meaning small businesses with
turnover of $5 million or less, it said.
"This next chapter of HSBC's presence in the U.S. will see the
team focus on our competitive strengths, connecting our global
wholesale and wealth-management clients to other markets around the
world," HSBC Group Chief Executive Noel Quinn said in prepared
remarks. He said the bank's U.S. mass retail operations "are good
businesses, but we lacked the scale to compete."
The London-based lender, which makes most of its profit in Hong
Kong and mainland China, is more than a year into an overhaul to
refocus its operations in Asia. In February, the bank said that it
was considering selling its unprofitable U.S. retail operations and
pouring about $6 billion of investment into Asia in the next five
years.
HSBC is also in talks to sell its unprofitable French retail
bank.
The bank said it has agreed to sell its East Coast mass-market
and retail-business banking operations, which include 80 branches
and around 800,000 customer accounts, as well as its online bank
portfolio to Citizens Bank. Those accounts had about $9.2 billion
in deposits and $2.2 billion in outstanding loans as of the end of
March.
Cathay Bank will buy 10 branches, with about 50,000 customer
accounts, on the West Coast.
The deals, which are subject to regulatory approval, are
expected to close in the first quarter of 2022. HSBC said it
expects the deals to incur about $100 million in pretax costs, and
foresees no material impact to its capital base, as measured by its
core-equity tier 1 capital ratio.
This is the latest of several steps by HSBC to retrench in the
U.S. In 2012, the lender sold its U.S. credit-card business to
Capital One Financial Corp., and sold some branches, mostly in
upstate New York, to First Niagara Financial Group Inc.
HSBC's broader U.S. wealth and personal-banking operations
generated about $1 billion of operating income last year. HSBC said
the businesses it is exiting made up about 13% of that wider
business's customer loans, and 21% of deposits, as of
end-March.
On Thursday morning in Hong Kong, HSBC's locally traded stock
dropped 0.2% to 49.00 Hong Kong dollars per share, equivalent to
about $6.31. As of Wednesday's close, the bank's Hong Kong-listed
stock had risen 20.5% so far this year.
Write to Kimberly Chin at kimberly.chin@wsj.com and Frances Yoon
at frances.yoon@wsj.com
(END) Dow Jones Newswires
May 27, 2021 00:15 ET (04:15 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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