Citizens, Cathay Buy Branches as HSBC Quits US Retail Banking
HSBC’s departure is the result of a “lack of scale to compete”, company says
- Written by Banking Exchange staff
Citizens Bank and Cathay Bank are set to pick up more than $10 billion deposits and 90 branches as part of HSBC’s plan to exit the US retail banking sector.
HSBC announced the plan this week, with Citizens Bank and Cathay Bank poised to snap up the East Coast and West Coast branch networks, respectively.
In a statement, HSBC said the exit was the result of a lack of ability to compete in the market and a desire to scale up its global wealth management capabilities.
HSBC Group CEO Noel Quinn said: “[The retail branches] are good businesses, but we lacked the scale to compete. Our continued presence in the US is key to our international network and an important contributor to our growth plans.”
HSBC closed 80 branches in the US during the first few months of the pandemic and opened just one new location. In addition, in November last year the Financial Times reported that the financial services giant’s North American business was struggling.
HSBC now plans to drive efforts in its most competitive space – wealth management – with a particular focus on high-net-worth clients in Asia.
Citizens Bank will purchase HSBC’s East Coast retail banking businesses and its online bank portfolio. This includes 80 branches and 800,000 customer relationships, with $9.2 billion in deposits and a $2.2 billion loan book.
“This transaction provides us with an attractive entry into the important New York City Metro, Washington DC and Southeast Florida markets,” said Citizens Bank chairman and CEO, Bruce Van Saun.
Separately, Cathay Bank will purchase the West Coast retail banking businesses, including 10 branches and 50,000 customer relationships. The purchase adds $1 billion in deposits and approximately $800 million of outstanding loans.
HSBC’s move also involves repurposing several remaining locations into 20-25 “international wealth centers”. A further 35-40 branches will be wound down.
All personal banking customers with a balance of below $75,000 will be moved out, as will all retail business banking customers, including small businesses with a turnover of $5 million and under.
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