HSBC says it will be ending retail banking in the US for most individual customers and small businesses, as part of a wider strategy to refocus on Asia.
The London-based lender has had trouble competing with America's largest banks, and said earlier this year that it would be redirecting jobs and capital to Asia, where it makes the vast majority of its profit.
As part of its downsizing HSBC, one of the world's biggest banks, said it would sell 90 of its 148 branches in the US, and would wind down a further 35 to 40.
It will keep around two dozen locations, in key cities across the US, from which to service its wealthy clients. The bank promised to keep open customer accounts with balances of more than $75,000, and business accounts with a turnover of $5m or more.
“We are pleased to announce the sale of the domestic mass market of our US retail banking business,” said group chief executive Noel Quinn. "They are good businesses, but we lacked the scale to compete.”
HSBC will sell its branches to two regional banks, Citizens Bank and Cathay Bank.
In February, the lender said it would begin to exit the US market while pumping some $6bn of investment into Asia over the next five years. It also said that it would quit the loss-making French market after two decades of doing business there.
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But the bank is in a difficult position, headquartered in London but with large swathes of its business based in Hong Kong and China.
HSBC recently pointed to risks from frayed relations between China and the West and "dampened" business sentiment in some parts of the Hong Kong market - where HSBC, which has a base in the territory, has been criticised over its stance in relation to a political clampdown by Beijing.
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HSBC's profits fell by 34% last year.
As a seasoned financial analyst and enthusiast with a deep understanding of global banking operations, I am well-versed in the intricacies of the financial industry. My expertise spans a wide range of topics, from market trends to the strategic decisions made by major banking institutions. Over the years, I have closely followed the developments within HSBC, one of the world's largest banks, and have a comprehensive understanding of its global operations.
Now, let's delve into the key concepts presented in the provided article:
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HSBC's Strategic Shift to Asia: HSBC has decided to end its retail banking services in the United States for most individual customers and small businesses. This move is part of a broader strategy to refocus the bank's operations on the Asian market. The decision is driven by HSBC's challenges in competing with the largest banks in the U.S., prompting a redirection of jobs and capital to Asia, where the bank generates the majority of its profits.
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Branch Reduction and Asset Sales: As part of the downsizing plan, HSBC is set to sell 90 of its 148 branches in the U.S. and wind down an additional 35 to 40 branches. The bank will retain around two dozen locations in key U.S. cities to serve its wealthy clients. The branches will be sold to two regional banks, namely Citizens Bank and Cathay Bank.
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Client Account Commitments: HSBC has assured that customer accounts with balances exceeding $75,000 and business accounts with a turnover of $5 million or more will remain open. This commitment is part of the strategic shift to cater to wealthier clients while withdrawing from the mass market of retail banking in the U.S.
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CEO Noel Quinn's Statement: Group Chief Executive Noel Quinn emphasized the decision to sell the domestic mass market of the U.S. retail banking business, acknowledging the inherent strength of these businesses but citing a lack of scale to effectively compete in the U.S. market.
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Investment in Asia: HSBC had previously announced its intention to exit the U.S. market and channel approximately $6 billion of investment into Asia over the next five years. This aligns with the bank's focus on leveraging its presence and profitability in the Asian market.
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Challenges Faced by HSBC: Despite being headquartered in London, HSBC faces challenges due to its significant business operations in Hong Kong and China. The bank has highlighted risks arising from strained relations between China and the West, as well as "dampened" business sentiment in certain parts of the Hong Kong market.
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Financial Performance: The article mentions that HSBC's profits fell by 34% in the previous year, indicating financial challenges that may have influenced the strategic decisions outlined in the article.
In conclusion, HSBC's decision to exit retail banking in the U.S. underscores the bank's strategic realignment towards Asia, reflecting the challenges it faces in the highly competitive U.S. market and geopolitical considerations impacting its operations in Hong Kong and China.
