HSBC Holdings announces to run down its $33 billion US credit card business in case it fails to get a buyer. The decision was a part of the bank's efforts to slash costs and cut back on retail banking. As per CEO Stuart Gulliver, the US credit card business is been discarded as the respective business plan fails to fit into the global strategic plan that HSBC is intending to implement.
Although, the US card business was a profitable business but it lacked the link between the customer base and rest of the group, thereby making it hard to cross-sell. Further, the bank despite of having a large amount of capital and liquidity, does not agree to invest more capital in a project that is strategically not important.
Therefore, Gulliver Stuart, who was upbeat in the medium term on the economy in the United States, though is still reviewing the operation of the US credit card, the CEO seem to be determined to run down the business if a suitable buyer was not available. Meanwhile, according to the review conducted till date, Gulliver has decided to look at selling, closing or trimming retail operations in 39 markets where it is sub-scale or unprofitable.
Further, revealing the global strategic plan of HSBC, the CEO further said the bank intends to reduce its global expenditure by as much as $3.5 billion over the next three years. Therefore, following the same, the bank has thus planned to divert its attention towards the emerging markets such as Indonesia. On this, Gulliver added, "The cost of re-engineering has to come from other parts of the world, and from being smarter."
Despite acknowledging the fact that there won't be many buyers who could but such a large portfolio business, the bank considers Barclays and Capital One to be capable of buying at least a part of the same