HSBC Exits U.S. Retail Banking Market Due To Mounting Losses

British multinational investment bank HSBC (NYSE:HSBC) has announced that it is shutting down its retail banking services in the U.S. after years of compounding losses.

The move to exit the U.S. was long-awaited as the global lender increasingly focuses its business on Asia, its biggest market.

Europe’s biggest bank has for years been trying to shrink its presence in some European and North American markets where it has struggled against competition from larger domestic players.

The bank said in a statement that it would exit retail banking for most individual and small business customers but retain a small physical presence in the U.S. to serve its international and wealthy clients. The bank currently has a U.S. network of 148 branches.

HSBC is also seeking to sell its French retail banking operations as part of the same strategy and has entered final negotiations to sell that business to private equity firm Cerberus.

Citizens Bank, part of Citizens Financial Group, has agreed to buy HSBC’s east coast personal and small business banking business including 80 branches, and Cathay Bank, a unit of Cathay General Bancorp, has agreed to buy its west coast business including 10 branches, according to HSBC.

HSBC said it expects to incur pre-tax costs of $100 million U.S. connected with the transactions, after which it does not expect to generate a significant gain or loss.

HSBC’s U.S. banking business posted a loss of $547 million U.S. in 2020, according to the bank’s annual results, versus a $5 billion profit in Asia, primarily from Hong Kong, its most profitable market.

HSBC listed shares rose as much as 0.8% to a three-month high on news that it is exiting the U.S. retail banking market.

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