British financial firm HSBC Holdings plc is aiming to purchase US credit card businesses, as part of its search for possible acquisitions to boost its profits.
HSBC’s Mark Tucker, who was appointed as chairman last month, has met with shareholders to discuss his plans for expansion, which he believes could help increase earnings of the world’s fifth-largest bank.
Investors have expressed their concern over the plans, given the company’s large retrenchment in recent years.
Sources familiar with the matter said that American consumer banking group Synchrony Financial could be one of HSBC’s potential target for a takeover.
North America is the firm’s third-largest region for sales, making up for about 14 percent of group revenue.
A spokesperson for HSBC declined to comment on the matter.
HSBC’s Possible Return to Deal-Making in the US
Any move to takeover businesses and venture into new markets in the US would mark the bank’s turnaround and its first return to deal-making ever since its $15.5 billion acquisition of Illinois-based lender Household International in 2003.
It also minimized its exposure in the country, after its money-laundering case in Mexico has led it to pay a record fine of $1.9 billion to settle allegations.
HSBC has already made an aggressive push into new markets before the financial crisis, but its departing chief executive Stuart Gulliver backed away from some promising economies as investors started to be skeptical at non-core operations.
Gulliver’s move to reduce and impose central control over the company’s extensive global network has so far resulted to leaving nearly 100 businesses and 18 countries, while it tries to resolve a number of costly misconduct matters.
HSBC’s Third-Quarter Revenue Asia Records the Most Sales
Following these issues, HSBC has redoubled its efforts in its more profitable Asian operation, its traditional focus.
Based on its third-quarter earnings results, it showed that Asia generated the most revenue among its five regions, with Gulliver saying that their shift to the continent has given them higher returns as well as lending growth, mostly in Hong Kong and the Pearl River Delta.
The region was HSBC’s main growth driver in loans, insurance and wealth management.
Pre-tax profit for its Asian operations, which accounted for 70 percent of its overall earnings, grew by 10 percent in the quarter to $4 billion. HSBC also added $1.1 billion of loans in Guangdong, China, where it has aimed for an expansion.
HSBC said that its customer base for retail banking and wealth management in mainland China has so far grown by more than 70 percent this year.
Besides shifting its focus to Asia, the firm has also cut back on some of its operations, including selling its Brazilian business.
Asia accounts for more than half of the bank’s profits, with China’s Pearl River Delta region as its core. HSBC has already committed billion of investments in the region, and is planning on propping up its retail and wealth management business.
HSBC stated that Pearl River Delta region is an extremely vital market to them, adding that they will keep on investing there and to hopefully see continuous progress as well as profitability build.