HSBC will sell more than $4bn in US personal and mortgage loans to an investor group as the bank's asset sales continue under CEO Stuart Gulliver.
HSBC Finance, a unit of Europe's biggest bank, will sell the loan portfolio to a SpringCastle Acquisition LLC, which is controlled by SpringLeaf Financial, an affiliate of the listed hedge fund Fortress Investment Group LLC and Newcastle Investment Corp, a publically traded real estate investment trust, for around $3.2bn, HSBC Finance said in a statement Tuesday. The bank expects the sale to be completed by the fourth quarter of this year.
"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 and focus on the core businesses supporting our aim to be the world's leading international bank," said HSBC Finance CEO Patrick Burke in the statement.
HSBC posted a 6 percent decline in full year profits Monday after it set aside more than $1.4bn to compensate British customers who were mis-sold payment protection insurance and paid nearly $2bn in fines to US authorities over allegations of money laundering.
Since taking over as CEO in 2011, Gulliver has been relentless in his aim of trimming the bank's balance sheet and cutting costs in order to increase shareholder returns. He's sold or closed 47 separate business units and plans to eliminate some 30,000 staff worldwide in an effort to increase savings by around $3.5bn before the end of this year. HSBC said 26 non-core disposals took place in 2012 and it expects at least four more in the 2013 financial year.
Two major assets sales this year - US credit card division Capital One Financial and China-based insurance group Ping An - have netted the bank around $12bn. The sales will help to offset the $1.9bn in fines HSBC was forced to pay US authorities in December of last year after a Senate investigation found evidence of more than a decade of lax controls it said linked HSBC to money-laundering, terrorist funding, tax evasion and financial ties to Iran that violate US sanctions.
HSBC Finance posted a $3.8bn pre-tax loss for 2012, according to the company's 10-K filing with the US Securities and Exchange Commission, which included a $2.3bn provision for bad loans, a 27 percent increase from 2011.