HSBC Bank USA will realign its US Wealth and Personal Banking business to focus on the banking and wealth management needs of internationally connected affluent and high net worth clients as a result.
It will depart its domestic mass-market retail banking and retail business banking businesses through a series of divestitures and the wind-down of the remaining branch network. For certain portions of the business, HBUS has entered into sale agreements with Citizens Bank and Cathay Bank, which are subject to regulatory approval.
HSBC revealed earlier this year that it was looking into strategic options for its US retail franchise, including organic and inorganic possibilities, in order to boost profitability. Subject to regulatory approvals, the announced transactions are scheduled to close in the first quarter of 2022.
Highlights of the HSBC exit
- Out of a total of 148 branches, 90 will be closed
- HBUS will keep a modest network of physical locations in existing markets, repurposing them as 20-25 worldwide wealth centers.
- The remaining branches, estimated to be between 35 and 40, will be wound down.
- All Personal, Advance and select Premier banking customers (those with balances under US$75k) will be removed.
- All retail business banking customers (those with a turnover of less than $5 million) will be removed.
Why is HSBC exiting retail banking in the US?
HSBC stated it is exiting the mass-market retail banking business in the United States by selling some sections of the business and winding down others, in a long-awaited step as the lender shifts its attention to Asia, its largest market. Quinn has been aiming to draw back from sub-scale markets and companies as part of its goal to save expenses throughout the banking group and redouble efforts to enhance growth in its core markets of Asia and the UK.
The bank announced that it will stop providing retail banking services to most individuals and small businesses, but would keep a tiny physical presence in the United States to serve its overseas affluent and very rich clients.
For years, Europe's largest bank has been attempting to reduce its footprint in several European and North American markets where it has faced competition from stronger domestic companies.
In early trading, the bank's Hong Kong-listed shares plummeted more than 1% before rebounding ground and trading in line with the local average.