HSBC credit cards: sale/closure looks more likely
On July 14, this credit card news blog reported on rumors that HSBC was planning either to sell its US credit card business or to close it down (see Rumors of HSBC’s demise may be greatly exaggerated). This writer had conducted a telephone interview with Rob Sherman, HSBC North America’s vice-president for public affairs, who had said:
The card business is under strategic review. We haven’t said any more than that, so it’s jumping to conclusions to say that we’re going to sell or close. We are evaluating a number of options… to determine the long-term future of the card business within HSBC.
Credit cards from HSBC could be at risk
Although Sherman’s carefully measured comments were undoubtedly true, IndexCreditCards.com warned at the time that HSBC’s chairman had earlier in the year announced a new direction for the global business. This could see the bank “divesting itself of assets (such as its U.S. credit card operations) that aren’t essential to the new strategy in order to fund acquisitions that are.”
The likelihood of HSBC selling or shuttering those operations grew earlier today when the bank unveiled a $1 billion deal to sell 195 branches in its New York and Connecticut network. Bloomberg reports that a further 13 HSBC branches in Connecticut and New Jersey are due to be closed by next year.
This morning, The Guardian (a newspaper that, like the bank itself, is based in London, England) suggested that HSBC has earmarked its retail businesses in 20 countries (out of the 87 nations in which it operates) for sale or closure. The report went on to call the North American operation “troubled,” and said that it was “the smallest generator of profit” for the entire group. So the chances of HSBC moving out of this market seem high.
Credit cards under many brand names threatened
What might this mean for holders of HSBC credit cards, which, besides those under the HSBC Premier name, include some or all of those branded GM, Sachs, Best Buy and Neiman Marcus, among others? Well, a sale could mean very little change indeed.
But closure could see cardholders losing their cards and therefore access to new credit. However, repayments of any then-existing credit card debt would likely remain in line with current card agreements.
Time to make a credit card application?
Existing users of all these branded cards may well be feeling nervous by now. To be fair to HSBC, there is a good chance that it would be able to sell its U.S. operations. At the moment, credit card companies generally are highly profitable, and it seems likely that one of them would pay a fair price to get its hands on this extra market share.
However, there remains a real possibility of closure, and this could eventually leave holders of the bank’s many cards high and dry. If you’re one of them, you may well wish to start shopping around for new plastic now. But before you complete a credit card application, be sure to read 5 ways to pick the best plastic first.
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