HSBC to sell US credit card business to Capital One
HSBC announced Wednesday that it is to sell its United States credit card and retail services business to US lender Capital One Financial Corp, as part of an overhaul to streamline its global operations.
The banking giant said it will sell the business in a deal worth around $32.7 billion, including a premium of about $2.6 billion, in an acquisition that is expected to close in the first half of next year.
The deal is subject to governmental and regulatory approval.
"The sale of the business and the recently announced disposal of 195 branches, primarily in upstate New York, are important steps in building an internationally focused business," HSBC said in a statement.
The gross assets of the US card business were $30.4 billion as at end of June, including $29.6 billion of customer loan balances.
The British-based lender said the United States remains a "key market" but said the credit card and retails services business was not aligned with its group strategy.
The sale comes after HSBC announced massive cost-cutting measures, including plans to save up to $3.5 billion by 2013 and to axe 30,000 jobs globally over the next two years as it shifts focus to fast-growing markets.
Group chief executive Stuart Gulliver said the sale will allow "capital to be redeployed over time", and reduce its risk-weighted assets by up to $40 billion while helping it to earn an estimated post-tax gain of $2.4 billion.
"HSBC is pleased to be working with Capital One on this transaction, given its strong commitment to maintaining relationships with HSBC's customers," he said, adding that all HSBC employees will be offered the chance to join Capital One.
Gulliver has said in May that the card business could be sold but only for a "sensible" price after the bank said it would conduct an assessment of its US branch network and cards business.
Despite the massive job cuts, the Asia-focused bank has also said it will hire up to 15,000 people in emerging markets by 2014 as it looks to Asia's booming financial sector to power future growth.
More than a third of HSBC's current workforce of 300,000 are already in Asia, which contributed 59 percent of the group's pre-tax profits in the first six months of 2011 -- up 16 percent from the same period last year.
The bank's net profit soared to $8.9 billion in the first-half on lower bad debt and tax charges, while total revenues edged ahead to $35.7 billion.
HSBC -- which unlike many of its rivals survived the 2008 crisis without state aid -- said earlier this month it would sell 195 retail branches, mainly in upstate New York, to First Niagara Bank for an estimated $1 billion.
HSBC was founded in Hong Kong and Shanghai in 1865, although it remains headquartered in London.
© 2011 AFP