HSBC to pull back from China credit card business

Following this announcement, the bank has stopped issuing new cards and is currently working towards winding down the service offered to a large part of China's onshore clients and customers. This closure process comes after failed attempts to sell the business, as well as multiple struggles to expand and make the enterprise profitable. 

In addition, HSBC is still finalising the plans and may keep service credit cards for a small segment of customers. The `stand alone` credit card users, those who do not leverage HSBC banking services in China, will not be able to have cards renewed on the expiry date, adding such clients account for a large portion of the business in the country.

More information on the announcement 

The decision to pull back was not reported previously and underscores the challenges that the financial institution faced in the process of growing its footprint in the region of China. This aimed to accelerate its development in the Asia market, while also deepening its presence in major regional economies. 

At the same time, the move marked a reversal of HSBC’s bank ambition to rapidly grow the China credit card business in late 2016. This strategy represented a part of its Asia pivot, as well as the expansion of its retail banking and wealth management solutions in China. 

Within the 18 months of the service launch, HSBC saw the business touch USD 500 million in balance, before growth stalled and transactions plugged due to the China COVID-induced lockdowns. Since then, clients and users have tightened spending in an overall slowing economy, a process that shrinked the credit card market more. 

HSBC also met competition and regulatory restrictions in the credit card business in the country, including rules around interest rate pricing and how banks deal with defaults. Combined with high client acquisition and fraudulent activities, all these challenges undermined the business prospects.