Europe’s largest lender first considered divesting its consistently loss-making U.S. division late last year as part of the bank’s efforts to achieve deep savings of around $ 4.5 billion and cut 35,000 jobs.
HSBC said Thursday it has sold 80 of its 148 branches on the east coast to Citizens Bank, which also acquired $ 9.2 billion in deposits and $ 2.2 billion in outstanding loans. Ten branches on the west coast were bought by Cathay Bank, which took over $ 1 billion in deposits and $ 800 million in loans. The remaining branches will be deleted.
HSBC said it would not generate “any significant gain or loss” from the deals with Citizens Bank and Cathay Bank other than incurring $ 100 million in costs on the transaction.
$ 3.5 billion
Amount HSBC will invest in wealth management in Mainland China and Hong Kong
The lender, which made most of its profits in Hong Kong, said it would keep “a small network of physical locations” in the United States after the divestiture. These would become “international centers of wealth” for its private banking and wealth management clients, most of whom were in Asia.
The sales are the latest step in a large-scale program to redeploy $ 100 billion in risk-weighted assets from underperforming companies in Europe and the United States to Asia, particularly in the wealth and asset management. In February, HSBC announced that it would further expand its commission-generating wealth management business in Hong Kong and mainland China, where it would invest $ 3.5 billion and hire more than 5,000 advisers.
The sale of the US network more closely aligns the bank’s fortunes with that of China. HSBC has been used as a political piñata in recent years as tensions mount between Beijing and Washington.
Noel Quinn, chief executive of HSBC, said the bank was leaving the US mass market because it “lacked the size to compete”.
“Our continued presence in the United States is the key to our international network and an important contributor to our growth plans,” he said.
Greg Hingston, Head of Wealth Management and Personal Banking Services for Asia Pacific, said: “The United States plays an important role in HSBC’s growth strategy in Asia. Our renewed strategy in the United States will allow us to better meet the needs of our international clients, who continue to look to the United States for international education, real estate, investment diversification, professional and family mobility and business expansion, among others.
HSBC closed 80 of its branches in the United States last year, leaving it only a fraction of the network of competitors such as JPMorgan and Bank of America. Insiders argued that the division’s lack of scale made it harder for it to turn around, especially during the coronavirus crisis and a period of extremely low interest rates that forced it to seek higher margin fees. .