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HSBC Completes Purchase Of Citigroup's Greater China Retail Wealth Arm

Tom Burroughes Group Editor 12 June 2024

HSBC Completes Purchase Of Citigroup's Greater China Retail Wealth Arm

Time will tell whether Citigroup's sale of 14 businesses around the world, from Mexico to Malaysia, will enable CEO Jane Fraser to achieve stronger bottom-line results in the medium term. For HSBC, it said the deal adds to its momentum in this segment of Asia.

Citigroup has completed the sale of its retail wealth management business in mainland China, continuing a spin-off of businesses as the US bank restructures under CEO Jane Fraser’s plans.

Yesterday, HSBC Bank (China), a wholly-owned subsidiary of UK/Hong Kong-listed HSBC, said it had wrapped up the acquisition. As a result, more than 300 Citigroup employees will join HSBC.

The Wall Street-listed banking group has been selling off 14 retail banking businesses around the world, focusing on the higher reaches of wealth management and other business segments instead. Time will tell whether this conscious decision to shrink a retail footprint overseas will benefit the bottom line. In the first quarter of 2024, Citigroup said its net income dropped year-on-year, although revenues on the private banking and wealth side improved marginally. (See here for examples of Citi's bank sales.) Citigroup has closed sales in nine of those markets including Australia, Bahrain, India, Indonesia, Malaysia, the Philippines, Taiwan, Thailand and Vietnam.

The bank said it is also pursuing the establishment of a wholly-owned securities and futures company in onshore China.

Citigroup's institutional businesses in China are excluded from the sale, the bank said in a statement. "Citi remains focused on serving institutional clients in China locally, regionally and globally," it said. 

As part of a previously-signed agreement, Citigroup will also transfer its remaining credit card portfolio in China to Fubon Bank China later this year.  

The portfolio of investment assets and deposits, and associated wealth customers, covers 11 major cities in mainland China, HSBC said in its statement. This has been integrated into HSBC China’s Wealth and Personal Banking operations which includes private banking.

“HSBC’s ambition is to be the leading international wealth manager for mass affluent and high net worth individuals in mainland China,” Nuno Matos (pictured), chief executive, wealth and personal banking, said. “This portfolio complements our growing set of wealth businesses in the country, demonstrating our commitment to the Chinese market and to helping our clients diversify their assets and enhance their long-term returns.”

HSBC said it has one of the largest wealth service networks of foreign banks in mainland China and is the largest Qualified Domestic Institutional Investor quota-holding bank. 

The bank sees such acquisitions as part of its growing momentum . As an Asian bank (it earns the bulk of its revenues outside the UK, and reports results in dollars). 

In 2023, in mainland China HSBC grew wealth invested assets by 53 per cent and its wealth client base by more than 30 per cent on a year earlier. In the first three months of this year, HSBC’s mainland China recorded an almost twofold increase in net new invested assets on a year earlier, to $19 billion. 

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