Tuesday saw HSBC Holdings; the biggest bank of Europe, saying that it was holding discussions regarding the likely sale of its card & retail services business in the US. The company told Hong Kong Stock Exchange that these talks were ongoing and no decision had been taken as of now. It added that whenever HSBC seems appropriate it would issue a further statement.
Through the statement, HSBC responded to speculations of a likely sale made lately by the media. The new CEO, Stuart Gulliver, under whose direction HSBC would undergo a cost-cutting revamp worth $3.5 billion has signaled the likely sale of its US card unit worth $30 billion+ in the month of May.
The sale has been labeled as “tough” by the bankers because they feel such huge credit card portfolios would not attract too many buyers considering the financial crisis. What has made the turning of a profit even more difficult is the presence of a regulatory crackdown. According to industry members it will not be easy for the company to obtain the desired premium required for valuable business in its books.
Since the year 2007, 2 companies namely General Electric and Citigroup tried — but met with failure — in selling similar huge U.S. credit card portfolios. Gulliver has said that in case it is unable to search for a buyer, the credit card business of HSBC will wind down.
