HSBC says U.S. unit among 'most challenging' parts in strategy

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Fixing HSBC's troubled U.S. division will be one of the "most challenging" parts of the lender's new $17 billion strategy, Chief Executive Officer John Flint said.

The London-based bank mulled scaling back "significantly" in the U.S. and considered purchasing a rival before deciding to "build on what we've got" instead, Flint said on a call with reporters.

Returns in the U.S., where the bank has lost billions of dollars on subprime mortgages and payments for misconduct, will climb over the next three years, driven by "organic growth" across businesses, according to a presentation Monday.

"Of all the things we have to execute on in the next three years, this is one of the most challenging pieces," Flint said. "We've struggled with this for a while."

HSBC North America Holdings, the U.S. subsidiary, had about $290 billion of assets at the end of 2017, according to Federal Reserve data. The division aims for a return on tangible equity — a measure of profit — of at least 6 percent by 2020 compared with less than 1 percent last year.

"The U.S. has been a difficult geography for us," Flint said. "Net net, the bank is profitable but not generating the right returns."

Bloomberg News