Financial giant Citi is transferring ownership of its Chinese wealth management arm to HSBC.
In a significant move, Citi has agreed to sell its onshore consumer wealth portfolio in China to HSBC Bank China. This deal, which is expected to close in the first half of 2024, covers total deposits and investment AUMs totaling roughly $3.6 billion.
The announcement comes as part of Citi's previously announced plan to wind down its China consumer banking business, a decision made public in December 2020. The financial terms of the transaction were not disclosed.
For HSBC, this move aligns with its strategy to renew its focus on Asia. The bank's CEO, Noel Quinn, had expressed interest in "potential bolt-ons" to enhance HSBC's wealth business in Asia back in February. Nuno Matos, CEO of wealth and personal banking at HSBC, stated that Mainland China is central to HSBC's ambition to be the leading wealth manager in Asia.
HSBC plans to extend employment offers to Citi staff supporting the acquired wealth operations. Up to 400 employees may move to HSBC as a result of the deal. This acquisition is expected to bolster HSBC's presence in China's wealth management sector.
Citi will continue to cater to ultra-high net worth Chinese clients through its international personal bank and private bank based in Hong Kong and Singapore. The deal does not involve any retail expansion or initiatives by HSBC in China.
Rumors of the Citi-to-HSBC transfer had surfaced last month. The CEO who announced the takeover of Citi's consumer credit portfolio in China is Georges Elhedery.
HSBC has undertaken organic and inorganic initiatives to expand its reach among China's wealthy, focusing on the affluent and emerging affluent segments. Recently, HSBC launched new private-banking offerings across six mainland cities and even acquired full ownership of its Chinese life insurance arm, HSBC Life China.
The move also fits with HSBC's impressive growth in Asia. The bank recorded $27 billion in net new invested asset inflows in Asia for the first half of 2023, representing a 21% year-over-year increase. This acquisition is expected to further boost HSBC's growth in the region.
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