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BRANCH BANKING | Tony Chua, Japan

HSBC seen to sell its Japan retail-banking unit

Sources said HSBC Premier could be shut if offers aren’t attractive.

HSBC Holdings Plc, Europe’s largest bank, is seeking buyers for its Japanese consumer banking unit four years after starting the business, said three people familiar with the matter.

HSBC may sell HSBC Premier, the division that targets wealthy individuals in Japan, the people said on condition of anonymity because the plan isn’t public. The London-based bank has started an auction for the business, and may shut it if offers aren’t attractive enough, two of the people said.

The U.K. lender is scaling back in parts of Asia, including Japan, South Korea and Thailand, as Chief Executive Officer Stuart Gulliver cuts assets to reduce expenses and prepare for tighter capital rules. HSBC said Tuesday that it agreed to sell operations in Costa Rica, El Salvador and Honduras to Colombia’s Banco Davivienda SA for $801 million to focus on bigger markets in Latin America.

“The possible sale means the profit outlook for the business is weak, and banks in Europe are keen to get rid of unprofitable assets,” said Toru Komatsu, who advises wealthy individuals in Japan as CEO of Komatsu Portfolio Advisors Co. “It’s difficult for foreign banks to compete with Japanese lenders that have larger networks, longer ties with clients and a deeper understanding of their assets and needs.”

Paul Allen, a spokesman for HSBC in Tokyo, declined to comment on the status of the Japanese retail unit.
HSBC, which opened its first Japanese branch in the port city of Yokohama in 1866, started services for “mass-affluent” customers -- people with savings of at least 10 million yen ($128,000) -- in Tokyo in 2008.

View the full story in Business Week.

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