HSBC expects $2.4bn gain on sale of US businesses

10th Aug 2011 07:03

US bank Capital One has been confirmed as the buyer of HSBC's card and retail services business in the US.The deal, some details of which leaked out over the week-end, will see HSBC sell the businesses at an 8.75% premium to gross customer loan balances, resulting in a consideration of $32.7bn based on 30 June 2011 figures.The consideration attributable to the premium may, at the option of the purchaser, be paid in cash or a combination of cash and common stock. Any portion of the consideration to be satisfied in consideration shares will be subject to a maximum value of $750m. HSBC would look to sell the consideration shares when appropriate, taking into account, among other things, prevailing market conditions.Global banking titan HSBC said its post-tax gain on the sale is estimated to be $2.4bn.Included in the sale are the MasterCard, Visa, private label and other credit card operations, but not HSBC Bank USA's $1.1bn credit card programme. HSBC Bank USA will continue to offer credit cards to its customers. All HSBC employees in the business being sold will be offered the opportunity to join the purchaser."This transaction continues the execution of the strategy we announced at our Investor Day on 11 May to focus our US business on the international needs of customers in Commercial Banking, Global Banking & Markets, Retail Banking and Wealth Management and onshore Global Private Banking. Although dilutive in the short term, this transaction will reduce Group risk-weighted assets by up to $40bn which, together with an estimated post-tax gain on sale of $2.4bn, will allow capital to be redeployed over time," said HSBC's group chief executive, Stuart Gulliver.--jh