HSBC Withdraws From US, Turns to Asian Market
The British bank HSBC will close most of its branches in the US after 40 years of service. The decision to pull back is an attempt to cut losses and focus on its wealthy clientele instead of retail.
The famous bank and its 150-year tradition will cut its existing US business network down from the current 148 branches to about 25 and turn them into international centers for big-cap management.
Although HSBC will remain present in the United States, the services will shift from retail to international banking and capital management. Its primary goal is now to cater to the needs of globally connected high-net-worth clients.
HSBC’s decision to withdraw from retail banking was long-awaited, as the bank has repeatedly expressed the need to cut costs, primarily in the US. Its biggest hurdle was gaining enough everyday customers, and it never managed to cross it. With 46% of the population switching to digital channels for their financial needs, traditional banking has been facing an uphill battle.
The London-based banking group has sold part of its business units to other US banking-sector “players,” as announced on Thursday, May 27. HSBC disclosed that Rhode Island-based Citizens Bank had agreed to buy their East Coast retail units, as well as an online business portfolio of about 800,000 customers and 80 branches. That makes for $9.2 billion in deposits and $2.2 billion in loans to be repaid.
Cathay Bank, founded by Americans of Chinese descent, has purchased ten HSBC branches on the West Coast, with approximately 50,000 customers, and $1 billion in deposits and $800 million in loans.
The bank’s Head of Wealth and Personal Banking, Greg Hingston, said: “The US plays a large role in HSBC’s Asia growth strategy. Our refreshed strategy in the US will allow us to better serve the needs of our international wealth clients, who continue to consider the US for international education, property, investment diversification, career and family mobility, and business expansion, among others.”
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