HSBC HOLDINGS PLC 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
05-27-21 0015ET
