HSBC Holdings Plc is selling two of its major U.S. consumer portfolios comprising of mortgage and personal loans worth $3.2 billion, all in cash, in an effort to scale down its operations in the country.
HSBC said in a statement Tuesday, March 6 that it will be selling off more than 400,000 personal homeowner and unsecured loan portfolios to major financial firms Springleaf Finance Corporation and Newcastle Investment Corp, reports Yahoo.
The total value of the assets was estimated to be worth $3.4 billion at the end of 2012. However, looks like the company will be selling at a slight loss. The deal is expected to be sealed by the end of the second quarter of 2013.
"These agreements accelerate the run-off of the legacy consumer mortgage and lending business and are a continuation of HSBC's strategy to reposition its U.S. operations," Patrick Burke, CEO of HSBC Finance Corp, said in the statement.
HSBC Financial Corp. will also be selling its loan-servicing facility in Kentucky. That sale is expected to close during the fourth quarter of 2013. Most of the employees working with the loans will become Springleaf employees once the deal is sealed, reports Bloomberg.
HSBC's consumer loan operations in the country have taken a severe blow. In 2003, the company purchased Household International, a prominent consumer lending institution, for $15 billion. All was well for the company until the housing market crashed in 2007, amassing billions of dollars of debt for the company.
HSBC has been trying to scale down its losses. The company has rid itself of 47 businesses since Stuart Gulliver took over as CEO in 2011. It recently sold its stake worth $7.4 billion in Ping An, a Chinese insurance firm. It also sold off shares worth $2.1 billion in its Panama operations. In 2011, the company also sold off its U.S. credit card business to Capital One, the third-largest credit card issuer in the country. The company is further seeking to sell assets worth $6 billion.
More recently, when scandals were overshadowing the global investment banking sector, HSBC was fined $1.9 billion for laundering money to Mexican drug traffickers. The bank accepted all its allegations and agreed to pay the fine.
