London/New York: HSBC Holdings Plc is nearing a deal to sell its $30 billion-plus US credit card business to Capital One Financial Corp, sources familiar with the situation said on Tuesday.
HSBC confirmed talks to sell the business but did not name the buyer. A deal could be announced soon, the sources said.
Such a deal would mark the second time Capital One has swooped for unwanted US assets from a retreating European bank in recent months. The McLean, Virginia-based firm said in June it was buying ING’s US online bank for $9 billion in cash and stock.
HSBC said in May it was looking to sell its US card arm, which has about $31 billion of loans, as part of a radical overhaul and $3.5 billion cost-cutting plan under new chief executive Stuart Gulliver.
Capital One has been seen as a motivated buyer for the business as it looks to bulk up on assets after the ING Direct deal. Wells Fargo & Co was also interested in buying the portfolio, sources have said previously.
“These discussions are ongoing and no decision has yet been made to proceed with any transaction,” HSBC said in a statement on Tuesday. Gulliver said last week the bank was making progress in the planned sale.
HSBC, Europe’s biggest bank, last week said it will shed nearly half of its underperforming US branch network, selling 195 branches to First Niagara Financial Group Inc for $1 billion and closing 13 more.
HSBC has been criticized for spreading itself too widely, gathering roughly 95 million customers across 87 markets, and Gulliver is aiming to put focus back on profitability.
Bankers have called HSBC’s US cards a tough sale because not many buyers remain for such large credit card portfolios since the financial crisis.
A regulatory crackdown has made it harder to turn a profit, and industry observers have said it could be difficult for HSBC to get the premium it wants for the value of the business on its books.
Since 2007, both Citigroup Inc and General Electric Co have tried -- and failed -- to sell similar large US credit card portfolios.
Gulliver has said that HSBC will wind down the credit card business if it cannot find a buyer.
Capital One spent much of the past decade transforming from a specialty credit card lender that mainly funded itself in the bond market, into a bank that relies heavily on deposits.
Now, facing weakened loan demand after the financial crisis, the bank is again looking for deals to expand its business.