International banking giant HSBC is apparently looking to scale back its retail banking operations. From Matthias Rieker at Dow Jones:
For a company that wants to focus on commercial customers that need an international bank for their cross-border business, and retail customers who travel and like to live in foreign countries, the U.S. remains an important market.
But HSBC no longer emphasizes the U.S. as a growth market, and is shrinking its U.S. consumer-lending businesses, which have been the fastest-growing part of U.S. banking.
HSBC has disclosed some serious restructuring plans in recent days. On Sunday, HSBC said it struck a deal to sell 195 upstate New York branches to First Niagara Financial Group Inc. (FNFG) for $1 billion. HSBC will continue to operate branches in cities including New York and Washington, D.C.
Just in case you were wondering, this probably isn't a great thing for most of the affected HSBC customers. I'm sure First Niagara Financial Group is a great bank and all, but the folks that signed up for HSBC accounts were probably looking for a bank with global reach, I don't think FNFG fits that description quite as well as HSBC.
I've written before in this space about how bank buyouts are rarely good for customers. Not only do new owners rarely carry over attractive rates and other perks from taken-over banks, but customers often face significant disruptions. After all, a bank customer probably had good reasons for picking their former bank from the thousands of retail banks in the U.S., and no matter how great the new owner of their bank is, a portion of those customers just won't be able to get what they need from the new entity.
Today I have a little more ammo for that argument in the form of an e-mail from a soon-to-be-former HSBC customer:
I have been HSBC customer for years but yesterday they announced the selling of all upstate branches to First Niagara. That will include my branch. In addition to checking and online savings accounts (that I could easily find a replacement too) I use HSBC Easy View a lot. It's an online service that allows you to view multiple banking, credit card and investment accounts all in one place, with a single login. It was great for tracking my expenses, net worth, etc.
I chose the HSBC bank years ago versus a local Credit Union in part because of the national presence. In addition to my own checking account I have a separate joined account with my daughter who is in college. And another joined one with my parents whom I partially support. Having multiple accounts at the same institution allows for easy way to move the funds as needed and gives a great ATM access around the country. Now due to merger I will need to recreate the setup.
Obviously this reader won't be the only customer who will end up having to redo all the work involved in finding another institution, closing their current accounts and opening a suite of new accounts at a bank similar to the one that was sold out from under them. Those wasted hours, which I imagine run into the thousands for big bank mergers, don't seem to be taken into account when regulators approve bank sales and mergers, but they should be. Maybe some built-in compensation for displaced bank customers is in order.
What do you think? Do you think bank mergers are disruptive for customers? Should banks have to compensate customers for that disruption?