HSBC Bank to Exit Credit Card Business - Other News

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Credit Card Applications » News » Other » HSBC Bank to Exit Credit Card Business

HSBC Bank to Exit Credit Card Business

HSBC Bank to Exit Credit Card Business
The content is accurate at the time of publication and is subject to change.

HSBC Bank, the seventh largest provider of Visa and MasterCards, is looking to sell its U.S. credit card business in order to focus on international growth and greater profitability. If a buyer cannot be found, the banking behemoth said it will simply ease out of its credit card business altogether.

Big Commercial Banks Change Plan

HSBC is one of the largest commercial banks in the U.S. and is eager to pursue its banking expansion in important markets. With nearly $139 billion in deposits as of March 31 and revenue of $33 billion from the U.S. credit card business, the company is looking to restructure and refocus its business lines.

The bank is also the third largest issuer of co-branded and merchant-branded credit cards in the U.S. Because of the way the credit card market is heading, with increased regulation and oversight, HSBC has decided that it needs to take the bank’s focus in a different direction.

“We need to change the shape of our business,” said Stuart Gulliver, CEO. “If we can’t find a buyer, we will put it into rundown.” Gulliver made the credit card announcement on the sidelines during the World Economic Forum taking place in Jakarta, Indonesia.

The Future

HSBC is targeting cost reduction of $3.5 billion to improve overall profitability. In the meantime, the bank also intends to increase its efficiency in the areas of capital and liquidity. Bank officials say that divesting the credit card operations will propel the bank toward its strategic plan for profitability. However, the size of the credit card portfolio is an obstacle to potential buyers. In fact, the credit card portfolio is so large that the word “gargantuan” is the term being thrown around.

Zacks.com named Barclays PLC and Capital One Financial Corp. as the two companies most likely to be interested in the credit card portfolio. However, Zacks maintains that it is unlikely that any one company could afford to acquire the entire portfolio owing to its size.

HSBC is also looking to save money by closing some of its least profitable retail bank locations. The bank has more than 460 locations in the U.S., of which 380 are in New York State.

The company hopes to expand its operations in the United Kingdom, Hong Kong and emerging markets.

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All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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