HSBC Exits US Mass Market Retail Banking; Strategically reposition U.S. retail to international banking and wealth management
LONDON AND NEW YORK – (BUSINESS WIRE) – HSBC Holdings plc (“HSBC”) today announced that it will exit its US mass market retail banking business through multiple transactions, pending regulatory approval. They include:
Release of 90 branches from a current network of 148 branches
HBUS will maintain a small network of physical locations in existing markets which will be reallocated into 20 to 25 international wealth centers
The remaining branches, between 35 and 40, will be removed
Exit for all personal, advanced and select Premier banking customers (those with balances less than $ 75,000)
Exit of all customers from retail to business banking (small businesses with turnover less than or equal to US $ 5 million)
As a result, HSBC Bank USA, NA (hereafter “HBUS”) will reposition its US wealth and retail management businesses to focus on the banking and wealth management needs of affluent and high net worth clients connected to the United States. global scale. HBUS will exit its mass market retail banking and retail business banking (collectively, the “Business”) through a number of divestitures and the liquidation of the residual branch network. HBUS has sales agreements, subject to regulatory approval, with Citizens Bank and Cathay Bank for parts of the business.
HSBC Group Managing Director Noel Quinn said:
“We are pleased to announce the domestic mass market sale of our US retail banking business. They are good companies, but we lacked the scale to be competitive. Our continued presence in the United States is the key to our international network and an important contributor to our growth plans. This next chapter of HSBC’s US presence will see the team focus on our competitive strengths, connecting our global wholesale and wealth management clients to other markets around the world. ”
Highlights of the transactions:
Citizens Bank has reached an agreement to purchase the East Coast mass market and retail banking business, as well as the online banking portfolio, comprising 80 branches and approximately 800,000 customer relationships with c. $ 9.2 billion in deposits and $ 2.2 billion in outstanding loans as of March 31, 2021.
Cathay bank has reached an agreement to acquire the West Coast mass and retail banking business, including 10 branches and approximately 50,000 customer relationships with US $ 1.0 billion in deposits and US $ 0.8 billion outstanding loans as of March 31, 2021.
HBUS will maintain a small network of physical locations in existing markets which will be reallocated into 20 to 25 international wealth centers to serve our core international customer base of approximately 300,000 affluent and high net worth (on a historical basis of approximately 1 , 4 m). We will liquidate the remaining branches, between 35 and 40, not subject to sale or reuse.
Michael Roberts, CEO, United States and Americas, said:
“Today’s announcement is an important step towards a more focused, simpler and more sustainable organization. A strong and internationally connected US business is an important part of HSBC’s value proposition, and we are excited to focus US operations in areas of competitive strength. At the same time, I am very happy that we were able to execute this strategic repositioning at a sustained pace. It was also important for us to find buyers who would be suitable for our customers and our employees. ”
HSBC announced earlier this year that it is exploring strategic options regarding its US retail franchise, including organic and inorganic options to improve the profitability of its US retail operations. The announced transactions are expected to close by the first quarter of 2022, subject to regulatory approvals. We expect that US $ 0.1 billion of pre-tax costs will 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 amount to approximately USD 1.8 billion as of March 31, 2021 and no significant impact is expected on the Group’s CET1 ratio.
The business is part of our United States Wealth and Individuals Management (“US WPB”) operations. The US WPB had reported 2020 net operating income of US $ 1.0 billion. As of March 31, 2021, the US WPB had loans and advances to customers of $ 23.8 billion, accounts receivable of $ 47.8 billion, and risk-weighted assets of $ 15.7 billion – the activity at ceding represents approximately 13%, 21% and 11% of these balances respectively. Balances remaining from ongoing WPB operations in the United States represent Premier, Jade and Private Banking clients. Further analysis of the results of our WPB business in the United States is provided in the HSBC Holdings plc 1T 2021 data pack.
For more details, please visit www.about.us.hsbc.com/movingforward
Notes to Editors:
1. HSBC USA
HSBC Bank USA, National Association (HSBC Bank USA, NA) serves clients through Retail and Wealth Management, Commercial Banking, Private Banking and World Bank and Markets. It operates bank branches in: California; Washington DC; Florida; Maryland; New Jersey; New York; Pennsylvania; Virginia; and Washington. HSBC Bank USA, NA is the principal subsidiary of HSBC USA Inc., a wholly owned subsidiary of HSBC North America Holdings Inc. In the United States, deposit products are offered by FDIC member HSBC Bank USA, NA, investment and brokerage services are provided by HSBC Securities (USA) Inc., (NYSE / FINRA / SIPC member) and insurance products are provided by HSBC Insurance Agency (USA) Inc.
2. HSBC Holdings plc
HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers around the world from offices in 64 countries and territories in its geographic regions: Europe, Asia, North America, Latin America, Middle East and North Africa. With $ 2,959 billion in assets as of March 31, 2021, HSBC is one of the world’s largest banking and financial services organizations.
3. An official US Securities and Exchange Commission filing as Form 8-K will be available on the HSBC Investor Relations website www.about.us.hsbc.com/investor-relations/hsbc-usa