London-based HSBC Holdings plc has reached an agreement to unload more than $4 billion in loans originated by its U.S. finance unit. A loan servicing facility is also trading hands.
The transaction involves more than 400,000 loans primarily originated through HSBC Finance Corp., the former Household International Inc. unit acquired by HSBC North America in 2003.
HSBC Finance Corp. announced in March 2009 that it would discontinue originating of all consumer lending products, including home loans.
The buyer of the personal homeowner and unsecured loan portfolio is SpringCastle Acquisition LLC, which is jointly owned by Fortress Investment Group LLC affiliates Springleaf Finance Inc. and Newcastle Investment Corp.
Springleaf and Newcastle will each have a 50 percent interest in the portfolio, which includes loans with an aggregate unpaid principal balance of $4.2 billion.
The sale, which is subject to customary closing conditions, is expected to complete in the second quarter .
In addition, HSBC has agreed to sell a loan servicing facility in London, Ky., and related assets to Springleaf. That deal, which is also subject to customary closing conditions, is expected to close in the fourth quarter following a transitional period to allow for the conversion of loans being sold to SpringCastle.
Once the servicing asset sale has completed, a majority of HSBC employees at the facility will become Springleaf employees.
The combined cash price for both deals is $3.2 billion. HSBC is carrying the gross assets on its books at $3.4 billion.
“These agreements accelerate the run-off of the legacy consumer mortgage and lending business and are a continuation of HSBC’s strategy to reposition its U.S. operations and focus on the core businesses supporting our aim to be the world’s leading international bank,” HSBC Finance Corp. Chief Executive Officer Patrick Burke said in the announcement.