HSBC set to launch sale of Australian retail banking arm

HSBC is believed to be close to firing the starting gun on the sale of its Australian retail banking arm. Picture: Jeremy Piper

HSBC is believed to be just days away from releasing documents into the market for a sale of its Australian retail banking arm, according to sources, which suggest that the business could sell for a price in the billions of dollars.

Speculation surfaced at the beginning of the year that HSBC was planning a sale out of Australia, and a move would be consistent with recent strategic moves elsewhere around the globe.

Sources have suggested that the business had about $40bn of loans and about $30bn of deposits, and the talk in the market is that at least three of the top four local banks will take a look at the business – NAB, Westpac and ANZ.

Much of its value would depend on the quality of its funding, but market experts believe a sale would be in the billions of dollars.

Some say Westpac could be the most likely to bid for the business, while Australian listed financial services operator AMP, which is tipped to be weighing up future options for its bank, may also make an offer.

HSBC’s mooted sale comes after NAB bought Citi’s’ Australia and New Zealand retail banking business for $1.2bn in 2022.

HSBC has already staged an exit from retail banking in the US market in 2021, when it agreed to sell parts of that business to Citizens Bank and Cathay Bank.

The next year, it struck a deal to sell its Canadian operations to Royal Bank of Canada.

In May, the Wall Street Journal reported that HSBC was disbanding its US business banking division that served small and medium sized companies. Only weeks earlier, it retreated from Wall Street, saying it planned to stop advising companies on doing deals in the US and Europe.

Chief executive Georges Elhedery has been overhauling HSBC since taking the helm last year, hoping to boost profits by removing duplicated roles and funnelling resources into areas where the bank plays in the big league.

Listed in London, HSBC is Europe’s biggest bank by assets and before Mr Elhedery’s appointment it had already been retreating from parts of the world where it once sought to compete.

The bank is giving priority to its home markets, Hong Kong and the U.K, and sharpening its focus on Asia.

Big global banks like HSBC are finding markets like Australia tough to crack unless they already have a major presence here.

They need scale to succeed, and there’s now a pragmatic approach being taken where it is better to exit and concentrate more on the markets where they perform the best.

The move to exit Australia comes at a time that HSBC is being sued by the Australian regulator ASIC for failing to protect customers from criminal scams.

Additional reporting: The Wall Street Journal