HSBC Holdings PLC ended 2003 by announcing its third deal in as many days.
The London banking giant, which has been reorganizing its portfolio of businesses recently and divesting noncore operations, announced Wednesday that it had sold its U.S. factoring business to CIT Group of Livingston, N.J.
The roughly 200-employee business was run mainly from the New York area by HSBC Bank USA and focuses on the apparel industry.
The sale involved loans of $1 billion to retailers against receivables. The price was not disclosed, but HSBC said in a press release that the value of net assets acquired was about $270 million.
Factoring is when a bank or another type of financial company takes over or buys receivables from a client and loans money to the client against those receivables. The bank is in charge of collecting the receivables and earns a fee from the client for the services.
A company spokesperson said that HSBC Trade Services, a unit of HSBC Bank USA, will continue to offer U.S. factoring services to international clients. Factoring is a relatively new business for HSBC, which inherited the operations after buying Republic New York Corp. for $10.3 billion in 1999. At the time the acquisition was seen as a way to raise the British company's U.S. profile.
CIT Group's core business is providing vendor financing, U.S. factoring, leasing and asset-based lending services. The company was acquired by Tyco International in 2001 but was spun off within a year because of Tyco's debt problems.
HSBC, which had been acquiring both European and U.S. businesses in the past few years, has been selling smaller businesses around the world to focus on consumer, commercial banking, and investment banking.
"HSBC's decision to exit the domestic factoring business was made as a result of our new strategic plan's emphasis on our core U.S. business," said Martin Glynn, president of HSBC's U.S. bank in a press release.
The $982 billion company announced Tuesday that it had sold its medical insurance unit, HSBC Salud SA in Argentina, to Swiss Medical Group. The deal followed the exercise of a put option covering over 40% of the unit by New York Life, and the subsequent acquisition of that interest by HSBC.
HSBC Salud had negative asset value of $1.2 million and 158,000 clients. The parent company sold a similar business in Brazil earlier in the year.
On Monday, HSBC announced it had agreed to buy 50% of Fujian Asia Bank for not more than $20 million in cash. Ping An Insurance of China is to buy the remaining 50% and then inject $23 million, dropping HSBC's stake to 27%. HSBC is to fund this transaction from its internal resources. The final amount is to be decided when the deal closes at the end of the quarter.
HSBC solidified its position in the United States in November with its $14.2 billion purchase of the consumer finance giant Household International of Prospect Heights, Ill. Mr. Glynn, who became HSBC USA's president and chief executive in November, said in a December interview with American Banker that HSBC executives viewed Household as a growth engine for the entire company.
