Thu, Aug 11, 2011 - Page 10 News List

HSBC set to sell US credit card unit to Capital One

AFP, HONG KONG

HSBC announced yesterday that it is to sell its US 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 would sell the business in a deal worth around US$32.7 billion, including a premium of about US$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 US$30.4 billion as at end of June, including US$29.6 billion of customer loan balances.

The British-based lender said the US 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 US$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 would allow “capital to be redeployed over time” and reduce its risk-weighted assets by up to US$40 billion, while helping it to earn an estimated post-tax gain of US$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.

Despite the massive job cuts, the Asia-focused bank has also said it would hire up to 15,000 people in emerging markets by 2014 as it looks to Asia’s booming financial sector to power future growth.

The bank’s net profit soared to US$8.9 billion in the first half on lower bad debt and tax charges, while total revenues edged ahead to US$35.7 billion.

This story has been viewed 3102 times.
TOP top