LONDON - HSBC made some progress Tuesday in shrinking its consumer loan portfolio in the United States, which has been a drag on its earnings.
The British bank agreed to sell a portfolio of personal unsecured loans and mortgages to Springleaf Finance and Newcastle Investment Corporation for $3.2 billion in cash. HSBC is also selling its loan servicing facility in London, Kentucky, to Springleaf, it said.
Reducing the loan book in the United States, which it acquired through the takeover of the former Household International subprime lender, has been a priority for HSBC’s management. The bank started to wind down the U.S. loan portfolio about five years ago after huge loan loses at the business had forced the management to admit the 2003 acquisition was a mistake.
If successful, the most recent sale would reduce the old Household portfolio to about $39 billion of assets, according to HSBC. The sale to Springleaf and Newcastle is expected to be completed before the end of this year.
The portfolio includes about 400,000 loans, which will be managed by Indiana-based Springleaf, Newcastle said in a statement.
