HSBC says the deal is in line with its plan to dispose of non-core businesses in Australia, including the sale of its stockbroking business to E*TRADE in June this year for A$51 million.
Stuart Davis, the CEO of HSBC in Australia, says the stockbroking business and the margin lending business were highly integrated with HSBC stockbroking carrying out the administration for all margin lending customers. ôSt George presented an attractive offer and ensures our customers have access to award-winning margin loan products,ö says Davis.
HSBC will focus instead on project finance, trade finance, debt capital markets, cash management and sub-custody. It recently bought WestpacÆs domestic custody business for A$150 million.
The bank has also rolled out a new consumer finance offering to large retail chains in the country.
The margin lending sale raises questions over what St George will do when its contract with E*TRADE expires in March 2007. E*TRADE has a contract to provide internet broking services to about 31,000 St George Bank customers but the arrangement is soon to come to an end.
It is rumoured that St George Bank wants to get into the retail stockbroking space. Last month it was said to be negotiating to buy a majority stake in retail broker Ord Minnett which is 30% owned by JPMorgan.
Retail stockbroking has been a big profit generator for other commercial banks in Australia, particularly for the Commonwealth Bank via its division CommSec.
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