According to two persons familiar with the situation, HSBC is expected to acquire Citigroup’s China consumer wealth management unit, which handles more than $3 billion in assets, in a huge boost to the London-based bank’s presence in that nation.
The purchase, the financial terms of which were not immediately disclosed, will also see Asia-focused HSBC absorb “a few hundreds” of Citi’s China-based employees, according to one of the people.
The agreement might be disclosed as soon as next month, according to two unnamed people who were not authorized to speak to the media.
Citi and HSBC declined to comment.
The acquisition is the latest in a series of initiatives by HSBC to expand in China, one of its core markets, as Europe’s largest lender vows to quit less profitable countries in order to focus on Asia, its primary income source.
Uncertainties about doing business in China have hampered Western corporations’ desire, with fewer banks expanding their presence in the face of weaker economic development and tighter national security limitations on data flows.
HSBC chairman Mark Tucker, though, told Beijing officials during a July visit that a “ice-breaking” approach historically espoused by British enterprises would assist the UK and China overcome obstacles and geopolitical concerns, according to a bank statement.
The bank, which already provides wealth management and private banking services in the domestic market, received a first-of-its-kind fund distribution qualification granted to a foreign firm earlier this month, opening up new potential in China’s 28.8 trillion yuan ($3.94 trillion) fund market.
According to the second source, HSBC intends to use its insurance brokerage network to begin selling funds to wealthy Chinese consumers as early as next month.
Citi’s China wealth management operations, which are part of the retail banking division it has been planning to exit since 2021, primarily service the world’s second-largest economy’s wealthy clientele with deposit, fund, and structured product products.
According to the first source, the bank’s private banking services, which cater to high-net-worth Chinese clients from places outside of China, remain unaffected. Citi is also in the midst of establishing a China securities brokerage unit.
Citi announced in December that it planned to sell some of its portfolios as it phased out its China retail banking business, as part of a strategy to exit consumer franchises in 14 regions throughout Asia, Europe, the Middle East, Africa, and Mexico.
In Asia, Citi is terminating its South Korean unit and aims to complete the transfer of its Indonesian operations to UOB Group. It finalized the sale and relocation of its Taiwan consumer businesses in August.