Asia-focused lender HSBC Holdings Plc (HSBC, HSBA.L) said that it will exit its U.S. domestic mass market retail banking business and retail business banking through a number of divestitures, and wind-down of the residual branch network. But, HSBC will continue investing in US international wholesale banking franchise.
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.
HSBC said Wednesday that it expects US$100 million of pre-tax costs to be incurred in connection with the transactions after which HSBC does not expect to generate a significant gain or loss.
HSBC Bank USA, N.A. or HBUS said that it 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 has entered into sale agreements with Citizens Bank and Cathay Bank for certain parts of the Business. HSBC said it will exiting 90 branches out of a current branch network of 148 branches. It will retain a small network of physical locations in existing markets which will be repurposed into 20-25 international wealth centres. HSBC noted that remaining branches, between 35-40, will be wound down.
HSBC will exiting all personal, advance and certain premier banking customers, those who are having balances below US$75 thousand.
It will exiting all retail business banking customers, small businesses with turnover of US$5 million and below.
HSBC noted that 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 US$9.2 billion in deposits and US$2.2 billion 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 about 50,000 customer relationships with US$1.0 billion in deposits and US$0.8 billion of outstanding loans as at 31 March 2021.