- HSBC marks the end of the bank’s 40-year attempt to operate a full-service bank in the United States.
- In addition to China, HSBC also hopes to expand in other fast-growing markets, including Singapore and India.
- The retail banking sector in the United States has seen some improvements over the last year.
HSBC Holdings will announce its 2020 annual results on Tuesday, and the investment community is concerned about the results of its strategic review. The British Financial Times quoted a person familiar with the matter as saying that HSBC will revisit its “pivot to Asia” business strategy and withdraw from retail banking in the United States.
HSBC concluded that the department cannot reverse its disadvantages. “The objective is to have more people in Asia to address the commercial opportunity there,” said one senior figure at the bank.
According to reports, this exit involves HSBC’s 150 branches in the United States, marking the end of the bank’s 40-year attempt to operate a full-service bank in the United States. The department has been losing money for the past 3 years.
“The job for [HSBC chairman] Mark Tucker is 80 percent politics and 20 percent business at the moment,” said one HSBC executive. “The Chinese have the potential to destroy them.”
People familiar with the matter said that in addition to China, HSBC also hopes to expand in other fast-growing markets, including Singapore and India, and HSBC will pave the way for mergers and acquisitions in Singapore.
The retail banking sector is one area in which HSBC has had problems in recent years. It has been hit hard by the subprime mortgage crisis and many of its commercial properties have been put up for collateral.
As many retail bankers were being hit with bad mortgages, more of them were closing their doors. Some of these companies were forced into bankruptcy as a result. The closures have left an important vacancy in the banking industry.
HSBC has had trouble meeting orders for its residential real estate business and for the business, according to recent news sources. The retail banking business represents less than 10% of the bank’s revenue. Even those commercial properties it does manage are not growing like the firm was hoping for.
It is also looking to cut expenses wherever possible. It announced that it is closing its retail trading business in the United States, its main commercial presence in America.
“Economic realities mean that what we were planning to do in February  we need to be even more urgent in doing,” Tucker told the Asian Financial Forum last month. He said the bank needed to “up the pace, up the intensity and up the delivery.”
In the last quarter, the company did manage to increase its revenues by $1 billion from its investment fund sale of London property. However, analysts are not expecting the same level of performance from the U.S. retail banking sector.
HSBC has also decided to quit the Hong Kong retail business. Analysts expect the retail banking group to focus more on its international expansion and Asian Business for its core markets including Mexico, Brazil, India, and China.
The retail banking sector in the United States has seen some improvements over the last year. Home sales and the number of new homes being built are up while existing homes are continuing to decline.
Consumer confidence is also reported to be holding up, but experts do not expect the level of improvement to be as strong as the bank is projecting.
There is little chance that the home sales will pick up, according to forecasts. The increase in available housing stock is expected to reduce the current inventory to pre-recession levels in the second half of this year.
The retail banking sector in the United States has a long way to make up for the losses it has incurred over the past few years. While there have been some improvements, analysts are not looking at the situation as favorably as they do the rest of the global retail banking sector.
HSBC has decided to focus its efforts on its international expansion efforts and Asia as a core market.