HSBC sells credit card and retail services businesses in US

HSBC Holdings on Wednesday said it would sell a part of its cards and retail services businesses in the US to Capital One Financial Corporation for $32.7 billion in a cash-and-shares deal. The move is in line with the bank's decision to streamline its non-strategic businesses.

“Businesses to be sold are HSBC's mono-line US credit card and private label credit card businesses, comprising gross customer loan balances, together with certain real estate and other assets and liabilities. Included in the sale are the Master Card, Visa, private label and other credit card operations,” the lender said in a statement. “The businesses to be sold do not include HSBC Bank USA's $1.1-billion credit card programme. HSBC Bank USA would continue to offer credit cards to its customers,” it added. The businesses would be sold through the bank's wholly-owned subsidiaries HSBC Finance Corporation, HSBC USA, HSBC Technology and Services (USA) and is subject to regulatory approvals. The transaction is expected to be completed in the first half of 2012. The proceeds received from the sale of these businesses would be used for the repayment of debt and the redeployment of capital.

 

Gross advances of the businesses to be sold were $30.4 billion as on June 30, including $29.6 billion of gross customer loan balances. Pre-tax profit was $1 billion, while net profit was $600 million. “Dilutive in the short-term, this transaction will reduce group risk-weighted assets by up to $40 billion, which, with an estimated post-tax gain on sale of $2.4 billion, will allow capital to be redeployed over time...All our employees would be offered the opportunity to join Capital One,” said HSBC group CEO Stuart Gulliver.