To be clear, HSBC isn’t selling off the credit card arm of HSBC Bank US – the business in question is part of a separate business called Household, which it acquired in 2003. And it’s not doing too badly: with total assets of about $30.4bn, it made an after-tax profit of $600m in the six months to the end of June. Which would explain the $2.6bn premium (8.5% of its total assets) which HSBC added onto the price.
HSBC made it clear when it published its second-quarter results at the beginning of this month that it was planning on a shake-up in order to save about $3.5bn by 2013. Cost-cutting measures so far have included the decision to axe 30,000 jobs over the next two years, instead hiring 15,000 in emerging markets instead. It also sold 195 of its retail bank branches in the US to First Niagara Bank in a deal reported to be worth $1bn.
The deal is, obviously, still subject to approval from the Government and regulators. But it’s a stronger indication than ever that, as far as banks are concerned, the US is old news. That’s got to smart.