HSBC’s CEO Stuart Gulliver is adamant to get
rid off the bank’s US cards business.

Speaking at the sidelines of the World
Economic Report in Jakarta, Gulliver made his first definitive
statement on HSBC’s  $33bn US credit card business,
saying:

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“If we can’t find a buyer, we will put it into
rundown.”

Although profitable, HSBC’s US card business
does not meet the bank’s desired ROE of between 12-15% and has thus
been labelled as non-core.

Gulliver said that the continuation of the
credit card business made no strategic sense in the US, blaming
American card holders’ relationship with stores rather than banks
as the reason for the lack of cross-sell potential.

However, the bank still aims to turnaround its overall retail
banking business in the US.

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Targets for HSBC’s US business include:

  • Expansion of HSBC Premier service;
  • Focus on growing diaspora of Asians in the
    US;
  • Repositioning of the HSBC branch network to
    enhance integrity to internationally connected markets within the
    US, such as Seattle, New York;
  • Reduction in consumer and mortgage loan
    portfolio by 50-60% in the next five years and
  • Reduction in vendor spending.

North America was the bank’s least profitable
region in terms of pre-tax profits as of year-2010: Having lost
$7.74bn in 2009,
HSBC’s US arm posted a profit before tax of $454m.

HSBC unveiled its strategy on 11 May and is
targeting an up to $3.5bn reduction in costs by fine-tuning its
retail banking business efforts to profitable markets, including
Turkey, Brazil and Mexico.