With Card Unit Sold, HSBC’s Dorner Plans A West Coast Push

Selling off a profitable card business and bank branches is painful. So is figuring out how to grow without them.

Irene Dorner, president and chief executive of HSBC’s U.S. bank, is saying goodbye to some of her unit’s most reliably profitable assets after its British parent decided they no longer fit into its global strategy.

This summer HSBC lined up buyers for both its $30 billion U.S. credit card portfolio and 195 branches in upstate New York and Connecticut, leaving Dorner with a leaner, if still ambitious, U.S. operation.

“It’s not without some emotion,” she said in an interview this week, adding the deals to sell both sets of assets were “tough decisions.”

But Dorner already is planning to turn her bank’s short-term cutbacks into long-term growth.

HSBC agreed in August to sell the credit card portfolio to Capital One Financial Corp. for a $2.6 billion premium (see story). In July, it agreed to sell its upstate New York branch network to First Niagara Financial Group for about $1 billion. That deal will leave HSBC with about 260 U.S. branches, mostly concentrated in New York City.

Both sales are expected to close in early 2012 and will “free up a lot of capital,” Dorner said. HSBC plans to reinvest the profits into its commercial banking and wealth management units, with a special focus on building out its business in California and the rest of the West Coast.

The British banking giant is trying to connect that region with its successful businesses in Asia, where HSBC is “very much part of the furniture and fabric,” Dorner said.

Now HSBC wants to capitalize on the close family, work and travel ties between its Asian customers and those on the West Coast. As part of its strategic realignment, “we are now understanding that the West Coast fits into HSBC’s strategy,” said Dorner, who ran HSBC’s Malaysian operations before taking over the U.S. bank in 2010.

HSBC is looking for that growth particularly from wealthy customers. It is expanding its Premier business, which gives customers special perks in return for at least $100,000 in investments and deposits.

But the company is also facing stiff competition for those customers from the largest U.S. banks. JPMorgan Chase & Co., US Bancorp and Citigroup Inc. have all zeroed in on California in the past few years with the same intent: mining high net-worth individuals for every possible dollar.

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