HSBC Gives Up on Mass Retail Banking, Sells Branches

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If you do your banking at HSBC, you may need a new home for your money soon. The banking giant said it’s getting out of the mass market retail banking business, continuing a trend: Net closures of bank branches hit a record in 2020.

Key Takeaways

  • HSBC said it’s selling 90 of its 148 retail locations and exiting the mass market retail banking business. It will eventually “wind down” other branches.
  • Many HSBC customers’ accounts will be transferred to acquiring banks Citizens and Cathay. 
  • The move adds to the trend of disappearing brick-and-mortar banking, which saw a record number of net closures last year.

HSBC plans to sell 90 of its 148 branches to Citizens Bank and Cathay Bank. If you have an account at one of those branches, it will be transferred to the acquiring bank, unless you decide to close your account. HSBC plans to eventually “wind down” 35 to 40 additional branches and repurpose the remaining ones into 20 to 25 “international wealth centers,” focusing on high net worth customers. The company said it will be in touch with customers who are affected to inform them of their options.

It’s the latest in a spate of banks deciding to close physical locations. Although U.S. banks and thrifts have been reducing their brick-and-mortar presence for years, the pace picked up steam in 2020, with a record number of locations shuttered. When the government locked down businesses last year to slow the spread of COVID-19, people were forced to adjust quickly, moving online to just about everything, including banking. Banks and thrifts took the opportunity to reevaluate how many physical locations they really needed.

Last year, 3,324 U.S. branches closed permanently, while only 1,040 new ones opened, according to S&P Global Market Intelligence. And that trend is continuing in 2021: In April alone, 459 branches closed, while 73 opened, S&P Global said, leaving roughly 82,600.  The number of bank branches peaked in 2009 at 92,030, according to the Federal Reserve Bank of St. Louis.

When banks close a branch, they are required by law to notify customers whose accounts will be affected, and customers must decide what they want to do with their accounts. Typically, banks will transfer the accounts to a nearby branch. Usually, distance is not a hurdle. In a January report, the St. Louis Fed said that in urban markets, the median distance to the nearest branch from one that closed is 0.18 mile, and in rural markets, it’s 0.64 mile. “Hardships imposed by extreme distances are atypical,” according to the report.

So what should you do if your branch is closing and distance does present a problem? Online and mobile options are usually available. If you’re faced with the prospect of having to travel to get to your bank, consider whether it offers enough digital services to keep in-person visits to a minimum. Most major banks also offer some deposits by phone, as well as electronic payments and transfers. 

Also consider how important automated teller machines are to you. You may find you don’t need the ATM. With all the automatic payment options like Zelle, Venmo, PayPal, and Apple Pay, in addition to credit and debit cards, people are using cash less and less.  A study by Travis Credit Union last August showed Americans are now twice as likely to use a debit or credit card as cash to purchase goods. Only 16% of Americans always carry cash.

If you still feel you need to have a bank nearby, here are some tips on how to shop for a new one.