U.S. and European banks including Citigroup Inc and HSBC Holdings PLC are considering selling off parts of their businesses as they prepare for tough times ahead, the Wall Street Journal reported.
While Citigroup may shed or shut several of its mid-size units, HSBC could exit all or parts of its $13 billion U.S. auto finance business, the Journal reported on Friday, citing sources familiar with the situation.
Some executives estimate that Citigroup could dispose of as much as $12 billion worth of what are considered noncritical assets, according to the Journal.
Units it could possibly shed include Student Loan Corp., which is 80 percent owned by the bank; its North American auto lending business; Brazilian credit card company Redecard SA, in which Citigroup held a 24 percent stake as of September 30; and its Japanese consumer finance business, according to the Journal.
New Citi Chief Executive Vikram Pandit's plans to streamline its operations include laying off about 20,000 employees and shedding business lines, the Journal reported, quoting people familiar with the matter.
Citi had already said in April that it was cutting about 5 percent of its work force, or 17,000 jobs, and there have been talks of cuts above that number. The bank employs over 300,000 people in over 100 countries.
HSBC is one of the most strongly capitalized of the world's global banks, but it has consistently said it will focus on fast-growing emerging markets and take a tough-minded approach to capital allocation.
HSBC has also indicated that businesses in more developed markets should have a global reach -- something it does not get from the U.S.-focused auto finance unit, which also fails to provide cross-selling opportunities.
Any assets sold off by global banks, including Citi, HSBC or even by smaller European lenders, could provide attractive opportunities for Asian banks or cash-rich sovereign wealth funds keen to diversify their investment portfolios.
HSBC declined to comment on whether it was considering a sale. Citigroup was not immediately reachable for comment.
(Additional reporting by Clara Ferreira-Marques in London)
(Reporting by Aarthi Sivaraman; Editing by Gary Hill and David Cowell)