HSBC bids goodbye to loss-making US division as profits move to Asia
HSBC has announced a “strategic withdrawal” from its US retail banking operations, selling chunks of its business as it continues to focus on Asia.
HSBC US made pre-tax losses of $500m in 2020
In February, the first notes of a withdrawal sounded as HSBC said it planned “organic and inorganic options” for its loss-making US division.
The US arm made pre-tax losses of $500 million in 2020, yet North America-based accounts make up 11% of its overall customer account value.
Now the bank is due to close 90 of its 148-strong branch network, and exit from all personal banking accounts with values of less than $75,000.
Similarly, it is set to exit all business banking accounts for firms with a turnover of less than $5 million per year.
Citizens Bank is purchasing the East Coast domestic mass market and retail banking businesses, as well as the online bank portfolio. This includes 80 branches, 800,000 customers, and $9.2 billion in deposits.
Cathay Bank will take on the West Coast, which includes ten branches, 50,000 customers, and $1 billion in deposits.
In a statement, the bank says it is repositioning to focus on its US wealth and banking division towards high-net worth individuals and clients.
Lacking scale
HSBC CEO, Noel Quinn, says that while the US operations were “good businesses”, they “lacked the scale to compete”.
He adds: “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.”
The move comes as HSBC continues to pivot towards the Asian markets, where it has historically performed well, and where it continues to experience growth.
In 2020, the bank’s Asian business reported $12.8 billion in profits.
In the first quarter of 2021, Asia accounted for two-thirds of HSBC’s adjusted profit before tax across its wealth and personal banking business, or $1.2 billion, according to Hingston data.
Revenue brought in by this Asian operation also rose 57% in the same quarter, with wealth balances in the region increasing by 18%.
Net new money flowing into HSBC’s Asian private banking business also rose by 89% to $6.6 billion between January and March 2021.
Related: HSBC to pay more than €1bn to get rid of loss-making French branches
