HSBC Holdings PLC has agreed to sell two portfolios of consumer loans in the United States for $3.2-billion (U.S.) in cash as part of a strategy to slim down its U.S. operations.
Europe’s biggest bank has been looking to sell more than $6-billion worth of U.S. mortgages and other personal loans as part of an accelerated rundown of its troubled U.S. loans book.
HSBC said on Tuesday that its HSBC Finance Corporation (HFC) division is selling its personal unsecured loan and personal homeowner loan portfolios to Springleaf Finance Inc. and Newcastle Investment Corp.
The assets were valued by HSBC at around $3.4-billion at the end of 2012.
HFC’s chief executive Patrick Burke said the deals accelerated the bank’s run-off of its consumer lending business in the United States. HSBC said in November it had moved $3.7-billion of unsecured personal loans in the United States to its “assets held for sale.”
The bank is having to deal with the legacy of a disastrous U.S. foray in 2003 when it bought Household International for $15-billion.
Years of aggressive lending followed that deal, leaving HSBC as one of the biggest sub-prime lenders when the U.S. housing market crashed and saddling it with losses of tens of billions of dollars.
When the scale of the crisis became clear HSBC shut its U.S. consumer loans business and has been running down the book.
HSBC has sold or otherwise exited 47 businesses since chief executive Stuart Gulliver took over at the start of 2011, including its recent profitable sales of its $7.4-billion stake in Chinese insurer Ping An and its $2.1-billion Panama business.
Mr. Gulliver wants to cut costs and boost profitability and has said a more streamlined structure is needed to better manage risk and compliance across the bank, which spans more than 80 countries and 60 million customers.
On Monday, the bank reported a fall in annual profits, hit by a money-laundering fine and compensation paid to customers.