HSBC quits US retail banking after 40 years

HSBC is ditching its massmarket retail bank in the US after 40 years as it focuses on growing its presence in Asia.

The London-based lender, which has struggled to make a profit across the pond amid rivalry from bigger domestic players, will sell 80 branches on the east coast of the US to Citizens Bank, handing them 800,000 customers with around £6.5bn in deposits and £1.6bn of loans.

Cathay Bank will buy ten of HSBC’s west coast branches, with approximately 50,000 customers, £700m in deposits and £564m of outstanding loans.

The deals will see HSBC offload all of its American customers with standard personal or Advance accounts, and any who use its Premier accounts and have less than £53,000 in the bank.

Noel Quinn, HSBC’s chief executive, said: ‘They are good businesses, but we lacked the scale to compete.’

The bank wants to ramp up its wealth management business in countries such as China and Singapore as it hopes to pull in a larger share of the region’s growing middle class.

in 2020, its US wealth and personal banking business made a loss of £386m versus a £3.5bn profit in Asia. The lender expanded into the US in the 80s, but has suffered a number of setbacks in the country. it bought US subprime lender Household in 2002, but after customers began to default on their loans it was forced to make a series of disastrous write-downs.

in 2016 it agreed to pay out $1.6bn to shareholders after being accused in a lawsuit of making misleading statements about lending practices and the state of the books.

HSBC will keep 20 to 25 branches in the US, which it plans to repurpose into ‘international wealth centres’ to serve rich multi-national clients.

And it will hold on to its wholesale bank in the country, which offers banking and consultancy services to major corporates. The remaining 35 to 40 of HSBC’s 148 branches in the country will be shut down.

HSBC’s exit comes amid growing tensions between the US and China, where the bank wants to expand.

Last year, then-US secretary of state Mike Pompeo blasted the lender for its ‘corporate kowtows’ to Beijing.

Chinese officials had reportedly threatened to punish the bank and backtrack on Beijing’s commitments to fund UK nuclear power projects in retaliation for Boris Johnson’s decision to cut Chinese telecoms firm Huawei out of the UK’s 5G network.

The lender has also been trying to get out of its retail banking operations in France, where it is rumoured to be in final sale discussions with investor Cerberus.

So far it has said it will remain committed to the UK – but earlier this year announced it would close 82 branches, leaving it with 511.