HSBC Holdings plc HSBC is considering a complete exit from retail banking operations in the U.S., the Financial Times reports. Senior management is expected to present a plan to the board in the coming weeks.
What Happened: London-based HSBC has been a full-service universal bank in the U.S. for 40 years. However, the bank's North American retail operations are running into losses for years, including $182 million in 2018, $279 million in 2019, and $518 million in the first three quarters of this year.
HSBC announced a $4.5 billion cost-savings plan in February that included 35,000 job cuts. Yet, executives called for drastic measures due to the impact of the pandemic and ultra-low interest rates, FT noted.
HSBC has closed 80 branches this year alone and has around 150 branches in the U.S.
Why It Matters: The bank is not planning a full exit from the U.S. yet, as the executives called the U.S. an essential marketplace for its investment bank division and are looking to grow its U.S. wealth management division.
Closing the retail operations will allow the bank to allocate more resources away from the U.S. in favor of more profitable businesses in Asia.
The management is also likely to recommend trimming HSBC's investment bank client roster to focus on international clients with Asian and Middle Eastern links.
HSBC has not made a final decision yet, and it could adopt another option of a digital-only model focused on international clients from the Chinese or Indian diaspora.
Price Action: HSBC shares closed 0.52% higher at $26.89 on Friday.
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