HSBC is reportedly considering offloading its entire retail banking network in the US in a bid to improve performance at its North America businesses.
In the coming weeks, HSBC’s senior management will present the latest plan to its board, the Financial Times (FT) has reported citing people familiar with the matter.
To ensure profitable businesses in Asia, the bank is looking to allocate its resources away from the US, where it tried to run a full-service, universal bank for 40 years.
Moreover, for many months, the UK lender’s banking arm in the US has been scrutinised for its plan to cut 35,000 jobs and its pledge to save $4.5bn in costs.
In its third quarter, HSBC said that it has already offloaded $4bn of risk-weighted assets in the US via “client optimisation”, the report added.
After closing 80 branches this year, HSBC is now left with about 150 branches in America.
HSBC said that it will de-emphasise less profitable domestic US businesses only, which could lead the bank to completely retreat from consumer banking segment.
However, HSBC has not yet finalised any decision. It anticipates doing so next year.
One of the people said: “The jury is still out. We are examining the financial viability of the cost and the reward of exiting or having a middle strategy where we keep a smaller presence.”
In May, the bank’s executives said that more drastic measures are required due to the impact of Covid-19 pandemic and ultra-low interest rates.
However, sources said that a full exit from US is not an option, particularly for HSBC’s investment bank.
The source added: “The US is an important marketplace”, adding that that bank is looking to expand its US wealth management division.
According to FT, the bank’s managers will likely suggest cutting HSBC’s investment bank client roster to focus on clients in Asia and Middle East regions.
The source added that the other option is to adopt a digital-only model and focus on Chinese or Indian clients.
Earlier this month, HSBC laid off 100 senior level employees at its UK retail banking arm as part of a restructuring plan to streamline its business and save costs.