HSBC has signed an agreement to sell its card and retail services business in the US to Capital One Financial for a premium of about $2.6bn.
The business to be sold is HSBC’s monoline US credit card and private label credit card business comprising gross customer loan balances together with certain real estate and other assets and liabilities.
Included in the sale are the Business’s MasterCard, Visa, private label and other credit card operations.
As of 30 June 2011, the value of the gross assets of the business was $30.4bn, including $29.6bn of gross customer loan balances.
This transaction is part of the bank’s strategy they announced at in May this year to focus their US business on the international needs of customers in Commercial Banking, Global Banking & Markets, Retail Banking and Wealth Management and onshore Global Private Banking.
HSBC Group chief executive Stuart Gulliver said although dilutive in the short term, this transaction will reduce Group risk-weighted assets by up to $40bn which, together with an estimated post-tax gain on sale of $2.4bn, will allow capital to be redeployed over time.
However, the business to be sold does not include HSBC Bank USA’s $1.1bn credit card program. HSBC Bank USA will continue to offer credit cards to its customers.
The acquisition is expected to complete in the second quarter of 2012.
Recently, HSBC also reached an agreement to sell 195 retail branches, primarily in upstate New York, to First Niagara Bank for an estimated $1bn.