HSBC has plans to withdraw its credit card business in China after entering the segment eight years ago, reported Reuters, citing sources.
This decision comes as it has been struggling to gain a profitable foothold in the country.
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According to sources familiar with the matter, the bank’s retreat from the credit card business follows unsuccessful attempts to sell this segment.
The Asia-focused bank may continue to service credit cards for a select group of “high-end” clients, while “stand alone” credit card customers—those not using other HSBC banking services in China—will not have their cards renewed upon expiry.
The move highlights the difficulties HSBC faces in expanding its presence in China, despite its growth in Asia.
The bank’s ambition to increase its credit card operations in China began with its launch in late 2016, aiming to broaden its retail banking and wealth management services.
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By GlobalDataBy September 2019, HSBC had garnered approximately one million credit card users in China.
However, after an initial surge that saw the business reach a $500m outstanding balance within 18 months, growth stalled, and transactions plummeted amid China’s strict COVID-19 lockdowns.
The Chinese credit card market has contracted as consumers have curtailed spending in response to a slowing economy.
The company spokesperson was quoted by Reuters as saying: “As part of our Premier and Global Private Banking services in mainland China, we continue to offer credit card services focused on international travel and lifestyle features.”, reported Reuters
In October this year, HSBC Hong Kong became a direct participant in China’s international payments system, thereby enhancing its position in trade finance as China seeks to promote the use of the renminbi, Financial Times reported.
During a conference in Beijing, HSBC Hong Kong operations co-chief executive David Liao announced that the bank’s Hong Kong division is “formally joining” China’s Cross-Border Interbank Payment System, commonly referred to as Cips.
