Welcome Back, HSBC; While You Were Gone…

by Brian Riley 0

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HSBC is returning to the U.S. Card business.  The global bank exited the US market in 2011 when it sold its portfolio to Capital One.  The return is exciting news for US payments.

Reuters reports :

  • HSBC’s push into credit cards and personal loans in the United States will be no easy task as the bank faces entrenched domestic rivals and the legacy of a previous disastrous foray into U.S. lending.
  • The move by HSBC to embrace a riskier but more lucrative slice of the U.S. market, that it has largely shunned in recent years, is part of its broader strategy announced on Monday to improve profitability – eyeing a global return on equity of 11 percent by 2020.
  • HSBC has just 0.1 percent of the credit card market in the U.S.

While HSBC has been active in other major markets, a 7-year absence comes at a time when US payments are evolving rapidly towards digital commerce, finding regulatory actions such as the CARD Act imposing on non-interest income, and a market saturated by top-tier issuers.

  • “It’s a good time to be in the U.S. card market, notwithstanding the competition is fierce,” said David Robertson, publisher of the influential Nilson report on the U.S. credit card market, citing low default levels and the growing economy.
  • “The question is whether you can convince your customer who already has a Capital One Card, and an America Express card and likely a couple of others, that they need yet one more.”

Mercator provided recent coverage on HSBC, in recent research, including Brazil, Russia, India, and China: Payment Developments in the BRIC Countries and Premium Travel Reward Credit Cards: High Profile but Unsustainable

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

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