HSBC has sold its retail banking network in the US, effectively closing its troubled operations in North America after 40 years of trying to run a full-service bank in the country.
Europe’s largest lender first considered the sale of its consistently loss-making US division at the end of last year as part of the bank’s efforts to achieve major cost savings of approximately $ 4.5 billion and cut 35,000 jobs.
HSBC said Thursday it had sold 80 of its 148 East Coast branches to Citizens Bank, which has also acquired $ 9.2 billion in deposits and $ 2.2 billion in outstanding loans. Cathay Bank has acquired ten West Coast branches, which acquired $ 1 billion in deposits and $ 800 million in loans. The other branches are being phased out.
HSBC said it would not generate “significant profit or loss” from the deals with Citizens Bank and Cathay Bank, other than $ 100 million in costs for the transaction.
$ 3.5 billion
Amount HSBC will invest in asset management in mainland China and Hong Kong
The lender, which made most of its profits in Hong Kong, said it would maintain “a small network of physical locations” in the US after the sale. These would become “centers of international prosperity” for its private banking and wealth management clients, most of which were located in Asia.
The sales are the final phase of a sweeping program to realign $ 100 billion in risk-weighted assets from underperforming companies in Europe and the US to Asia, particularly in asset and asset management. In February, HSBC said it would further expand its asset management business in Hong Kong and mainland China, where it will invest $ 3.5 billion and hire more than 5,000 advisers.
The sale of the US network brings the bank’s fortunes more in line with China. HSBC has been used as a political piñata in recent years as tensions between Beijing and Washington have increased.
Noel Quinn, HSBC chief executive, said the bank exited the US mass market because it “lacked the scale to compete.”
“Our continued presence in the US is key to our international network and is a significant contributor to our growth plans,” he said.
Greg Hingston, Head of Wealth and Personal Banking for Asia Pacific, said, “The US is a big part of HSBC’s growth strategy in Asia. Our renewed strategy in the US allows us to better serve the needs of our international wealth clients, who continue to consider the US for areas such as international education, real estate, investment diversification, career and family mobility, and business expansion. “
HSBC closed 80 of its US branches last year, leaving it a fraction of the network of rivals such as JPMorgan and Bank of America. Insiders argued that the division’s lack of scale made it more difficult to turn around, especially during the coronavirus crisis and a period of ultra-low interest rates that forced it to chase higher margin fees.