HSBC Holdings Plc has exited from the United States mass retail banking market by selling a large part of its business to local lenders and winding down others. The lender will now focus only on wealthy clients in the country.
The move did not come as a surprise as media reports already revealed the British lender’s plans to exit the US retail market last year to boost its profitability.
“Today’s announcement is an important step towards becoming a more focused, simpler and sustainably profitable organization,” said Michael Roberts, HSBC’s CEO of US and Americas.
“A strong, internationally connected US business is an important part of HSBC’s value proposition, and we are excited to be focusing the US business in areas of competitive strength.”
Per Thursday’s announcement, the London-headquartered bank will sell 90 branches, while it will wind down 35 to 40 branches.
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Citizens Bank agreed to pick up the east coast retail business of HSBC that will include 80 branches and around 800,000 customers, and Cathay Bank the west coast business, which is much smaller than the eastern business. HSBC is expecting to receive a pre-tax value of $100 million from those transactions.
HSBC will retain a network of 20 to 25 physical locations in the country and will transform them into international wealth centers.
Interestingly, the British lender is looking into leaving its retail business in Europe, shifting all its focus to the Asian markets. In addition, the bank is in the process of selling its French retail unit and has plans to lay off 35,000 global staff.
“They are good businesses, but we lacked the scale to compete,” Noel Quinn, Group CEO at HSBC, said. “Our continued presence in the US is key to our international network and an important contributor to our growth plans.”
“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.”