HSBC To Purchase Citigroup's China Wealth Unit
HSBC is poised to acquire Citigroup's China consumer wealth management division, which oversees assets exceeding USD 3 billion, according to two undisclosed sources familiar with the matter. This development is a significant boon for the London-based bank's operations in China, though the financial particulars of the transaction have not been disclosed. As part of the deal, HSBC will also absorb "a few hundred" employees based in China from Citigroup.
An official announcement regarding this acquisition is expected to occur as early as the following month. The sources cited cannot be identified as they lack authorization to speak to the media, and both HSBC and Citigroup have declined to comment.
This acquisition is the latest in a series of moves by HSBC to expand its presence in China, a crucial market for the bank. HSBC has committed to retreating from less profitable regions and concentrating on its primary revenue source, which is Asia.
While Western companies have been cautious about doing business in China due to uncertainties and challenges, HSBC's chairman, Mark Tucker, expressed optimism during a visit to Beijing in July. He invoked a historical "ice-breaking" spirit among British businesses, asserting that it would help the UK and China navigate challenges and geopolitical tensions.
HSBC, which already offers wealth management and private banking services in the local Chinese market, recently achieved a unique fund distribution qualification as a foreign firm. This qualification opens up new opportunities for HSBC in China's vast 28.8 trillion yuan ($3.94 trillion) fund market.
One notable plan is to leverage its insurance brokerage network to initiate fund sales to affluent Chinese individuals as early as the next month.
Citigroup's China wealth management operations, part of its retail banking arm that it has sought to divest since 2021, primarily serve wealthy clients in the world's second-largest economy, providing deposit, fund, and structured product services. However, its $3 billion in consumer assets under management pales in comparison to its Chinese and foreign counterparts like Standard Chartered, which have more extensive retail branch networks for wealth management.
Importantly, Citigroup's private banking services, which cater to high-net-worth Chinese clients from the bank's locations outside China, will remain unaffected.
Citigroup is also in the process of applying to establish a China securities brokerage unit. Previously, the bank announced its intention to sell some of its portfolios as it phased out its China retail banking business, in line with its strategy to withdraw from consumer markets in 14 countries across Asia, Europe, the Middle East, Africa, and Mexico.
In Asia, Citigroup is in the process of closing its South Korea operations and is finalizing the transfer of its Indonesian business to UOB Group. In August, it successfully completed the sale and migration of its Taiwan consumer businesses.
