HSBC Leaving US Retail Banking Business

HSBC has announced it is leaving US retail banking by selling some parts of the loss-making business and winding down others - an anticipated move as Europe’s largest lender shifts its focus to its main market - Asia. 

HSBC has for years been trying to shrink its presence in some European and North American markets where it has struggled against competition from larger players.

The bank said in a statement on Wednesday that it would exit retail banking for most individual and small business customers, but retain a small physical presence in the US to serve its international affluent and very wealthy clients. "They are good businesses, but we lacked the scale to compete”, Noel Quinn, HSBC group CEO commented.

HSBC unveiled in February a revised strategy focused mainly on wealth management in Asia, and at the same time said it was "exploring organic and inorganic options" for its US  retail banking franchise. HSBC is also seeking to sell its French retail banking operations as part of the same strategy, and has entered final negotiations to sell that business to the private equity firm - Cerberus.

Citizens Bank, part of Citizens Financial Group, has agreed to buy HSBC's east coast personal and small business banking business including 80 branches, and Cathay Bank, a unit of Cathay General Bancorp  has agreed to buy its west coast business including 10 branches.

"These transactions, whilst very small in the context of HSBC group, should contribute to streamlining the group”, analysts at Jefferies said. They added, though, that the bank is expected to still face some investor pushback as it is not completely exiting US retail.

HSBC additionally said it expected to incur pre-tax costs of $100 million connected with the transactions, after which it does not expect to generate a significant gain or loss.

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