Banking giant HSBC has decided to sell its card and retail services business in the United States to Capital One Financial Corporation for 32.7 billion U.S. dollars, the lender said Wednesday in a statement.
Post-tax gain on sale estimated to be 2.4 billion U.S. dollars based on June 30, 2011 figures, according to the statement.
At 8.75 percent premium to gross customer loan balances, HSBC will sell monoline U.S. 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 MasterCard, Visa, private label and other credit card operations, it said.
The business to be sold does not include HSBC Bank USA's 1.1 billion U.S. dollars credit card program. HSBC Bank USA will continue to offer credit cards to its customers, it said.
The transaction is subject to various conditions including, among others, the receipt of applicable governmental and regulatory approvals.
With the deal, HSBC will focus its U.S. business on the international needs of customers in commercial banking, global banking and markets, retail banking and wealth management and onshore global private banking, said HSBC Group Chief Executive Stuart Gulliver.
Although dilutive in the short term, this transaction will reduce HSBC risk-weighted assets by up to 40 billion U.S. dollars which, together with a post-tax gain of 2.4 billion U.S. dollars, will allow capital to be redeployed over time, he said.
HSBC serves customers worldwide from around 7,500 offices in over 80 countries and territories in Europe, the Asia-Pacific region, North and Latin America, the Middle East and Africa. With assets of 2,691 billion U.S. dollars at June 30 of 2011, HSBC is one of the world's largest banking and financial services organizations.
Trading in shares of HSBC was suspended in Hong Kong stock market in the afternoon on Wednesday. HSBC closed at 69 HK dollars (8.85 U.S. dollars) per share by midday, up 3.9 percent from the previous closing.
