HSBC Canada Confirms Brokerage Sale and Intent To Grow Remaining Businesses

HSBC Holdings PLC confirmed that following the sale of part of its advisory business to a unit of National Bank of Canada it will continue to invest in and hire for other parts of its Canadian business.

Nevertheless, on the same day that HSBC announced the sale of its retail brokerage, its global banking and markets division did lay off a small number of bankers. "Less than 10" employees in Canada have been let go, said someone at HSBC, and all of the affected persons were part of the global banking group, which includes units such as investment banking and mergers and acquisitions, according to the Globe and Mail.

In a statement, HSBC explained that the sale of its retail brokerage platform through HSBC Canada-for a total of C$206 million, payable in cash-will generate proceeds that will be "reinvested to grow the businesses of the Canadian bank which are fully aligned with our strategy."

As such, "HSBC Bank Canada will focus on its competitive strengths, seeking to expand its commercial banking business, particularly in central Canada, and investing in its global banking and markets, and retail banking and wealth management businesses," the company said.

HSBC also has an investment counseling business and a trust company for high net worth customers, and is keeping its online retail brokerage platform, Tim Pinnington, head of HSBC's wealth management unit in Canada, told Dow Jones. "We intend to grow" in that business, Pinnington added.

The sale, meanwhile, represents "the full-service investment advisory component of HSBC Securities (Canada) Inc.," which includes some 120 investment advisors plus associated office managers, office administrators and sales staff plus associated office managers, office administrators and sales staff, HSBC announced.

The real problem was lack of scale, Lindsay Gordon, president and chief executive of HSBC Canada, has said, observing HSBC's force of 120 advisors wasn't large enough and that the bank could not be secure the scale it required on its own to compete better.

"This is not about pulling back. It's about recognizing what our competitors' strengths are," Gordon said.

Sharon Wilks, HSBC Bank Canada's assistant vice president for public affairs told eFinancialCareers recently that despite the anticipated sale of part of its advisory business, HSBC would focus on expanding its commercial banking business in Central Canada, its trust business, as well as other Canadian units such as its discretionary Private Investment Management services (where counselors are given broad discretion to make investment choices on clients' behalf).

On the whole, HSBC Bank Canada has roughly 8,000 employees and more than 260 offices including over 140 bank branches in Canada. HSBC announced this summer that it will lay off 30,000 people worldwide by 2013 and has been working to shed assets, including its U.S. credit card unit, but Wilks wanted to set the record straight regarding its continued commitment to growth in many parts of its Canada operation.

As part of the new sales agreement, HSBC Bank Canada will refer clients with non- discretionary full-service retail brokerage needs to National Bank, and HSBC and National Bank will cooperate to serve the financial needs of mutual clients.