HSBC Holdings PLC will exit from its U.S. retail and small-business banking operations as the bank shifts its focus to wealth management and international banking, especially in Asia.
The Bank will exit its US domestic mass market retail banking business through several transactions, pending regulatory approval. They include: exiting 90 branches out of a current branch network of 148 branches;
HBUS will retain a small network of physical locations in existing markets which will be repurposed into 20-25 international wealth centers;
Remaining branches, between 35-40, will be wound down; Exiting all Personal, Advance and certain Premier banking customers (those with balances below US$75k) and Exiting all retail business banking customers (small businesses with turnover of US$5m and under), reads an official release of the Bank.
As a result, HSBC Bank USA, N.A. (‘HBUS’) 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 will exit its domestic mass market retail banking business and retail business banking through a number of divestitures, and wind-down of the residual branch network. HBUS has entered into sale agreements, subject to regulatory approval, with Citizens Bank and Cathay Bank for certain parts of the Business.
“We are pleased to announce the sale of the domestic mass market of our US retail banking business. They are good businesses, but we lacked the scale to compete. Our continued presence in the US is key to our international network and an important contributor to our growth plans. This next chapter of HSBC’s presence in the US will see the team focus on our competitive strengths, connecting our global wholesale and wealth management clients to other markets around the world,” said Noel Quinn, Group Chief Executive of HSBC.
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 c. US$9.2bn in deposits and US$2.2bn 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 approximately 50,000 customer relationships with US$1.0bn in deposits and US$ 0.8bn of outstanding loans as at 31 March 2021.
HBUS will retain a small network of physical locations in existing markets which will be repurposed into 20-25 international wealth centers to serve our core international customer base of c.300k affluent and high net worth customers (out of a historical base of c.1.4m). The Bank will wind down the residual branches, between 35-40, not subject to sale or repurposing.
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, subject to regulatory approvals. The Bank expects US$0.1bn of pre-tax costs to be incurred in connection with these transactions after which HSBC does not expect to generate a significant gain or loss. The risk weighted assets (on a PRA basis) associated with the announced transactions were c.US$1.8bn at 31 March 2021 and no material impact is expected on the Group’s CET1 ratio.