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June 14, 2011updated 04 Apr 2017 1:07pm

HSBC Gulliver adamant to get rid off US card business

HSBCs CEO Stuart Gulliver is adamant to get rid off the banks US cards business. Speaking at the sidelines of the World Economic Report in Jakarta, Gulliver made his first definitive statement on HSBCs $33bn US credit card business, saying:

By Duygu Tavan

HSBC’s CEO Stuart Gulliver is adamant to get rid off the bank’s US cards business.

Speaking at the sidelines of the World Economic Report in Jakarta, Gulliver made his first definitive statement on HSBC’s  $33bn US credit card business, saying:

“If we can’t find a buyer, we will put it into rundown.”

Although profitable, HSBC’s US card business does not meet the bank’s desired ROE of between 12-15% and has thus been labelled as non-core.

Gulliver said that the continuation of the credit card business made no strategic sense in the US, blaming American card holders’ relationship with stores rather than banks as the reason for the lack of cross-sell potential.

However, the bank still aims to turnaround its overall retail banking business in the US.

Targets for HSBC’s US business include:

  • Expansion of HSBC Premier service;
  • Focus on growing diaspora of Asians in the US;
  • Repositioning of the HSBC branch network to enhance integrity to internationally connected markets within the US, such as Seattle, New York;
  • Reduction in consumer and mortgage loan portfolio by 50-60% in the next five years and
  • Reduction in vendor spending.

North America was the bank’s least profitable region in terms of pre-tax profits as of year-2010: Having lost $7.74bn in 2009, HSBC’s US arm posted a profit before tax of $454m.

HSBC unveiled its strategy on 11 May and is targeting an up to $3.5bn reduction in costs by fine-tuning its retail banking business efforts to profitable markets, including Turkey, Brazil and Mexico.

 

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