HSBC's Arm to Exit German Custody Business Under Simplification Plan

HSBC Holdings Plc’s HSBC subsidiary, HSBC Continental Europe,has reached an agreement to sell its custody operations in Germany to BNP Paribas BNPQY. This potential transaction marks another milestone in HSBC’s ongoing simplification strategy for refocusing on being the leading corporate and institutional bank in Germany and Europe for its international clients.

Details of HSBC's Divestiture Deal

HSBC’s custody business in Germany focuses on domestic custody, clearing and depository services for German institutional clients.

Although the financial terms of the agreement remain undisclosed, the deal will involve the complete transfer of HSBC Continental Europe’s custody operations in Germany, including all assets and its related clients, to BNP Paribas. The transaction is expected to undergo a phased execution of the transfer of staff and clients starting in early 2026.

Further, the completion of the potential transaction is subject to regulatory approval and antitrust approvals and the conclusion of negotiations with the Works Council in Germany.

Post-transaction, both HSBC and BNP Paribas are committed to ensuring a smooth transition for clients and colleagues.

HSBC's Divestiture Deal Aligns With Simplification Effort

The decision to divest the custody unit in Germany is in line with HSBC’s October 2024 simplification strategy. The company is realigning its business segments as part of this effort. In sync with this, HSBC is winding down investment banking activities across the United Kingdom, Europe, and the United States and divestitures of its French life insurance arm, HSBC Assurances Vie (France), and private banking business in Germany. It also announced the sale of its business in South Africa.

In March 2025, its U.K. division, HSBC UK Bank plc, announced the sale of its U.K. private client trust business to Ludlow Trust. In February 2025, HSBC Bank Middle East, Bahrain branch, entered into a binding agreement to transfer its retail banking business in Bahrain to Bank of Bahrain and Kuwait B.S.C., one of the largest retail and commercial banks in Bahrain.

In the past couple of years, HSBC has completed the sale of its businesses in the United States, Canada, New Zealand, Greece, Russia, Argentina and Armenia, as well as the retail banking operations in France and Mauritius.  

Driven by these efforts, HSBC aims to achieve $1.5 billion in annualized savings by the end of 2026. To implement the plan, HSBC will likely incur nearly $1.8 billion in total severance and other upfront charges by the end of 2026. The bank also intends to reallocate an additional nearly $1.5 billion of costs from non-strategic activities to priority growth areas over the medium term.

HSBC's Price Performance and Zack Rank

Over the past year, shares of HSBC have rallied 38.2%, outperforming the industry’s growth of 32.2%.

Currently, HSBC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Similar Steps Taken by Other Financial Firms

In June 2025, Huntington Bancshares HBAN announced its decision to streamline operations by divesting the corporate trust and institutional custody business of its subsidiary, The Huntington National Bank (Huntington), to Argent Institutional Trust Company (“AITC”). This strategic move reinforces the company’s commitment to enhancing its core financial offerings, positioning itself for greater efficiency and long-term profitability.

Post-transaction, AITC and Huntington will maintain a strategic relationship, with Argent continuing to provide corporate trust, escrow, and custody solutions to Huntington’s commercial banking clients.

In March 2025, State Street Corp. STT agreed to acquire global custody and related businesses outside of Japan from Mizuho Financial Group, Inc. These businesses aid the international investments of Mizuho’s Japanese clients.

Following the completion of the deal, STT will partner with Mizuho Financial Group to support its Japanese clients with global custody and related services. Meanwhile, Mizuho Financial Group will continue to offer trust and custody services for domestic assets within Japan, capitalizing on its expertise and network.

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This article originally published on Zacks Investment Research (zacks.com).

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