HSBC Bank USA

Last updated
HSBC Bank USA, N.A.
HSBC USA Inc.
Company type Subsidiary
Industry Finance and Insurance
Founded1850;174 years ago (1850) (as Marine Midland Bank)
Headquarters 452 Fifth Avenue, New York City, New York, U.S.
Number of locations
148 Branches (until Feb 18, 2022) 20-25 International Wealth Center (Beginning Feb 22, 2022)
Key people
Michael Roberts (Chairman, President, and CEO)
Products Financial services
Number of employees
43,000 (including HSBC Finance)
Parent HSBC
Website www.us.hsbc.com

HSBC Bank USA, National Association, an American subsidiary of the British banking group HSBC, is a bank with its operational head office in New York City and its nominal head office in McLean, Virginia (as designated on its charter). HSBC Bank USA, N.A. is a national bank chartered under the National Bank Act, and thus is regulated by the Office of the Comptroller of the Currency (OCC), a part of the U.S. Department of the Treasury. The company has 22 branch locations. [1]

Contents

History

In 1980, The Hongkong and Shanghai Banking Corporation acquired a 51% controlling interest in Marine Midland Bank, headquartered in Buffalo, New York. HSBC acquired the remaining interest in 1987. The banks continued to operate under the Marine Midland name until 1998, when the offices were re-branded as HSBC Bank. [2]

In 1994, Marine Midland acquired Spectrum Home Mortgage, which operated in eight states. In 1995, Marine Midland acquired United Northern Federal Savings Bank, with branches in Watertown and Lowville, New York. Marine Midland also acquired The HSBC's 6 New York City retail branches, and the next year Hang Seng Bank's two branches in New York City.

That same year, Marine Midland acquired 11 branches from the East River Savings Bank in the New York Metropolitan area. Marine also acquired the US dollar clearing business of JPMorgan Chase. At the same time, HSBC transferred 2 branches in the northwestern United States to HSBC Bank Canada. The next year, Marine completed its acquisition of First Federal Savings and Loan from Toronto-based Canada Trust, for $620 million. First Federal Savings, headquartered in Rochester, had $7.2 billion in assets, 1,600 employees, 79 retail branches in New York State and 15 mortgage origination offices in 9 states.

In 1998, Marine Midland acquired First Commercial Bank of Philadelphia, which had $90 million in assets and $78 million in deposits in two branches and focused on the Asian-American community, for $23.75 million. [3]

In 1999, the company acquired Republic New York for $10.3 billion and moved its head office from One HSBC Center in Buffalo to what is now the HSBC Tower on Fifth Avenue. [4] [5]

In 2004, HSBC USA sold two upstate New York branches to Gloversville-based City National Bank & Trust Co. [6] HSBC did not have enough nearby branches to give it economies of scale.

In July 2011, the company sold its branches in upstate New York to First Niagara Financial Group for $1 billion, effectively selling-off the core of the old Marine Midland Bank. [7] [8]

In 2015, the company paid $30 million to settle a lawsuit regarding overdraft fees. [9]

In 2016, the Office of the Comptroller of the Currency imposed a $35 million fine on the company for deceptive billing practices. [10]

In 2019, HSBC announced plans to open new branches, including one in Depew, New York, near one of its remaining back offices in Buffalo. This came as a surprise after HSBC sold its branch network in Upstate New York in 2012 to First Niagara, KeyBank, Community Bank, N.A. and Five Star Bank.

In January 2019, HSBC announced it would open two new branches in Western New York, as part of the bank’s initiative to open 50 branches in new and existing markets in the United States. [11] [12] In February 2020, Reuters News Agency reported that HSBC Holdings would shed $100 billion in assets, shrink its investment bank and revamp its U.S. and European businesses, including closing around a third of its 224 branches and target only international and wealthier clients. [13]

In February 2021 it was reported that HSBC is planning to pull out of all retail banking in the United States and that it is exploring a sale of its remaining 150 branches. [14] [15] These reports proved true; on May 26, 2021, HSBC announced that it would abandon the United States retail market as part of a pivot to Asia. In April 2022, Citizens Bank completed the acquisition of 80 branches from HSBC in New York City, New Jersey, Pennsylvania, Washington, D.C., Maryland, Virginia, and Florida. [16] HSBC's 10 West Coast branches are expected to be sold to Cathay Bank. 35-40 branches are expected to be closed entirely rather than be sold to another bank. HSBC also announced it would maintain around two dozen locations within the United States, converting the branches from standard retail banks to "international wealth centers" for the use of international travelers who use HSBC, corporations, and certain high net-worth clients. [17] [18]

Money laundering and organized crime

In December 2012, HSBC paid a record $1.9 billion fine for laundering in excess of $881,000,000 in drug cartel money and violating anti-terrorism sanctions. [19] [20] [21] [22] The cartels that HSBC helped included the Sinaloa cartel. [23]

In September 2020, the FinCEN Files probe revealed that HSBC moved vast sums of dirty money for international criminals. HSBC did so even though compliance officers raised warnings about the sources of nearly $1.5 billion that was processed through the bank. Investigative reporting revealed that at least $900 million came from shell companies linked to alleged criminal networks. HSBC did these actions even though it was under probation by the U.S. for its past role in money laundering on behalf of criminal syndicates. [23]

The FinCEN files also revealed that HSBC moved suspect money from Russia. [24]

Operations

HSBC Bank works with OneSpan to issue multi-factor authentication tokens for online banking services. [25]

Controversies

In 2010, HSBC was rated the worst in customer advocacy by Forrester Research, which asked bank customers to rank their banks. In the national survey of approximately 4,500 banking customers assessing the top 50 banks, in answer to the question: "My financial provider does what’s best for me, not just its own bottom line," HSBC set a new all-time low with a 16% rating, 10% below the previous year. [26]

In 2012, the U.S. government uncovered a "blatant failure to implement proper anti-money laundering controls facilitat[ing] the laundering of at least $881 million in drug proceeds through the U.S. financial system". [22]

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References

  1. ↑ HSBC Bank USA Locations
  2. ↑ Hartley, Tom (December 7, 1998). "Marine Midland' no more". Buffalo Business First .
  3. ↑ "Marine Midland to buy First Commercial Bank". Philadelphia Business Journal. September 25, 1998.
  4. ↑ "HSBC To Pay $10.3 Billion For Republic". The New York Times . May 11, 1999.
  5. ↑ "HSBC buying Republic Bank". CNN Money . May 10, 1999.
  6. ↑ "City National Bank to buy two HSBC branches". Albany Business Review . 20 April 2001. Retrieved 2015-02-18.
  7. ↑ Stempel, Jonathan (July 31, 2011). "HSBC sheds U.S. branches in $1 billion First Niagara pact". Reuters .
  8. ↑ Kline, Allissa (May 21, 2012). "First Niagara completes HSBC takeover". Buffalo Business First.
  9. ↑ Aubin, Dena (March 4, 2015). "HSBC Bank USA to pay $30 mln to settle overdraft fee lawsuit". Reuters.
  10. ↑ "OCC Assesses $35 Million Penalty Against HSBC Bank USA, N.A.; Orders Restitution to Customers for Unfair Billing Practices" (Press release). Office of the Comptroller of the Currency. April 13, 2016.
  11. ↑ Kline, Allissa (January 17, 2020). "HSBC Bank picks location for second Buffalo-area branch". Buffalo Business First . Retrieved 2021-12-01.
  12. ↑ "HSBC on Expansion Spree, to Add Branches in Western New York". Yahoo! Finance . Retrieved 2019-06-17.
  13. ↑ White, Sumeet Chatterjee (February 18, 2020). "HSBC to slash investment bank, 35,000 jobs in strategy overhaul". Reuters.
  14. ↑ Cockburn, Gerard (February 24, 2021). "West Australian authorities ban Crown from allowing junkets at its Perth casino". The Australian . Surry Hills, NSW. Retrieved 2021-12-01.
  15. ↑ "HSBC shifts focus from west to east as profits dive". BBC News . February 23, 2021. Retrieved 2021-02-24.
  16. ↑ "HSBC Branches Transitioning to Citizens". Citizens Bank. Retrieved 13 April 2022.
  17. ↑ Chin, Kimberly (May 26, 2021). "HSBC to Exit U.S. Retail Banking". The Wall Street Journal . Retrieved May 26, 2021.
  18. ↑ Moving Forward, official announcement from HSBC
  19. ↑ Viswanatha, Aruna; Wolf, Brett (11 December 2012). "HSBC to pay $1.9 billion U.S. fine in money-laundering case". Reuters. Retrieved 2015-02-18.
  20. ↑ Neate, Rupert (July 11, 2016). "HSBC escaped US money-laundering charges after Osborne's intervention". The Guardian . London.
  21. ↑ McLaughlin, David; Farrell, Greg (April 1, 2016). "HSBC Money-Laundering Controls Aren't Sufficient, U.S. Says" . Bloomberg L.P.
  22. 1 2 "HSBC Holdings Plc. and HSBC Bank USA N.A. Admit to Anti-Money Laundering and Sanctions Violations, Forfeit $1.256 Billion in Deferred Prosecution Agreement" (Press release). U.S. Department of Justice. December 11, 2012.
  23. 1 2 "HSBC moved vast sums of dirty money after paying record laundering fine - ICIJ". 2020-09-21. Retrieved 2022-02-27.
  24. ↑ "How a network of enablers have helped Russia's oligarchs hide their wealth abroad - ICIJ". 2022-03-02. Retrieved 2022-03-09.
  25. ↑ "HSBC Bank USA to ship two-factor one-time password device to customers". Finextra.
  26. ↑ Schultz, Jennifer Saranow (February 3, 2010). "The Least-Trusted Banks in America". The New York Times . Retrieved 2015-02-18.
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