HSBC Holdings PLC has decided to exit the bulk of its US retail banking business. The British bank took this decision apparently after several failed attempts to revive the struggling business. The bank will sell most of its retail banking locations to Citizens Bank and Cathay Bank. The bank started thinking about it last year when it tried to dispose of its consistently loss-making division in order to make saving worth USD 4.5 billion. It was even planning to cut 35,000 jobs. After months of consideration, the bank has now decided to sell most of the branches on the east and west coast. HSBC said that is closing most of the US business so that it can shit focus on richer clients.
With this, the footprint of the bank will reduce to 25 branches in the country from the existing 148. The bank said Citizens Bank has agreed to take over 80 of its branches. It will also acquire USD 2.2 billion of outstanding loans along with USD 9.2 billion of deposits. On the other hand, 10 branches on the east coast will be acquired by Cathay bank who will take over 800 million of loans and USD 1 billion of deposits. Some other branches, the bank said, will be wound down. The remaining branches in the country will be converted into international wealth management centers. “While the bank will remain in America, the remaining branches will now concentrate on ‘international banking and wealth management. To be specific, the focus will be on serving affluent and high net worth clients,” the bank said in a statement.
The bank has been repeatedly warning that it will have to take cost-cutting measures. Especially in the United States as it has been struggling for a long to gain a foothold among everyday consumers. And this is why the pullback was widely anticipated. Commenting on the decision of the sale of the domestic mass market in the United States, Chief Executive Officer Noel Quinn said that they were good business the bank lacked the scale to compete. “The next in the presence of the bank in the United States will be about team shifting its focus towards our competitive strength. We will be involved in wealth management of clients around the world,” Quinn said.