Exclusive: HSBC to acquire Citigroup China consumer wealth business

HSBC is making a significant move to strengthen its business in China by acquiring Citigroup’s consumer wealth management business in the country. This acquisition will provide HSBC with more than $3 billion in assets and will see the bank taking over a few hundred of Citi’s staff based in China.

Although the financial details of the transaction have not been disclosed, the deal is expected to be announced next month, according to sources familiar with the matter. HSBC has been focused on expanding its operations in China, one of its key markets, as it looks to exit less profitable geographies and concentrate on its revenue-generating regions, particularly Asia.

The move comes at a time when many Western companies are cautious about doing business in China due to uncertainties and new national security restrictions. However, HSBC’s chairman, Mark Tucker, has expressed optimism about the bank’s prospects in China, emphasizing the “ice-breaking” spirit historically adopted by British businesses in overcoming challenges and geopolitical tensions.

HSBC already offers wealth management and private banking services in the Chinese market. Earlier this month, the bank received a first-of-its-kind fund distribution qualification from Chinese authorities, which will allow it to tap into the country’s vast fund market. HSBC plans to leverage its insurance brokerage network to launch fund sales to affluent Chinese individuals as early as next month.

Citigroup’s China wealth management business mainly serves wealthy clients in the country, offering deposit, fund, and structured product offerings. However, its $3 billion in consumer assets under management is overshadowed by its Chinese and foreign competitors, such as Standard Chartered, which have a larger network of retail branches focused on wealth management.

It is worth noting that while Citi is looking to exit its retail banking business in China, its private banking services, which cater to high net worth Chinese clients from its locations outside of China, will remain intact. Additionally, Citi is in the process of applying to establish a China securities brokerage unit.

Overall, the acquisition of Citi’s China consumer wealth management business represents a strategic move for HSBC as it continues to expand its presence in one of its most important markets. By strengthening its foothold in China’s wealth management sector, HSBC aims to capitalize on the country’s enormous market potential and navigate any challenges or geopolitical tensions that may arise.