Overhaul, not sale, on the cards for HSBC's U.S. arm

Tue May 5, 2015 10:55am EDT
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By Steve Slater

LONDON May 5 (Reuters) - HSBC is set to extend a six year overhaul of its U.S. business to revive its fortunes rather than add it to the 77 businesses sold in the past four years, the British bank's boss said on Tuesday.

HSBC Chief Executive Stuart Gulliver has said he could sell underperforming businesses in the United States, Brazil, Mexico and Turkey if they cannot be turned around.

Although no decisions had yet been taken on their future, Gulliver said the bank was likely to remain in the United States given the importance of dollar clearing for its trading business as well as providing access to U.S. companies.

"You should still expect a restructuring story," he said of the U.S. business, adding not to expect a 'drastic' outcome.

HSBC has started a sales process for its retail banking in Brazil and Turkey, but the U.S. and Mexico businesses were likely to be kept, people familiar with the matter have said.

HSBC's disastrous 2003 purchase of consumer lender Household left it as one of the biggest U.S. subprime lenders when the housing market crashed in 2007, landing it with more than $50 billion in losses and a lengthy restructuring job. It sold its U.S. credit card arm and half its branches there in 2011.

Gulliver said the U.S. business had problems but American corporates were big clients overseas, having access to dollar clearing supported its trade business and investment bank, and deposits from the retail bank helped fund other areas.

"The profitability of the U.S. business on its own somewhat underplays the significance of it, because there's substantial revenues from U.S. companies that get booked in places like China, Saudi Arabia, Mexico that wouldn't come about if we were not in the United States," he said.   Continued...