HSBC has agreed to sell its US credit card and retail services unit to Capital One Financial Corp for a premium of about $2.6bn, as Europe's top bank streamlines its mammoth operations by shedding non-core businesses.
The sale of the arm, which had gross assets of $30.4bn at the end of June, is part of a radical overhaul and $3.5bn cost-cutting plan under new chief executive Stuart Gulliver.
"This sale frees up capital and it shows that Stuart Gulliver is executing on the priorities that he's laid out," said John Wadle, an analyst with Mirae Asset Management.
"The price the business fetched was somewhat disappointing, but it shows that it was a buyer's market. All in, it is still progress because at least they completed this, and it didn't take too long," he added.
The business earned $600m in after-tax profit for the half year to 30 June, 2011. HSBC said the deal would boost its consolidated core Tier 1 capital adequacy ratio by 60 basis points to 11.4 percent at the end of June.
Capital One will pay the consideration in cash and stock, with HSBC agreeing to accept up to $750m of Capital One shares as part of the deal.
City A.M. Reporter