HSBC sells $25B Australian loan book to Blackstone

HSBC ↗ 4.38% announced on Friday that it will sell its A$36 billion ($25.3 billion) Australian home and personal loan portfolio to Blackstone ↘ 1.03%, marking the world's largest-ever sale of a home loan portfolio and the bank's exit from retail banking in Australia.

The Deal

The portfolio will be acquired by Virgo BidCo, an entity wholly owned by funds managed by Blackstone affiliates, with the transaction expected to close in the first half of 2027 subject to regulatory and competition approvals. The portfolio had a book value of about A$36 billion as of March 31, 2026, with the final purchase price to be adjusted before completion to reflect new loan originations and other factors.reuters+1

Pepper Money will act as servicer for the ongoing administration of the loans following completion. HSBC expects the sale to generate a loss of less than $100 million and roughly $300 million in restructuring costs linked to winding down the remainder of its Australian retail business over the next 18 months. Members of HSBC and its subsidiaries are considering providing senior financing for a substantial portion of the purchase price.aol+3

Blackstone said the portfolio would be held across its Credit and Insurance, Tactical Opportunities, and Real Estate Debt Strategies funds. Dan Leiter, global head of Blackstone's Credit and Insurance International business, said "international expansion is a core priority for our private credit business" and called the deal a demonstration of "strong conviction in the growing credit opportunities across the Asia-Pacific region".businesstimes+1

Strategic Context

The sale is the latest move in CEO Georges Elhedery's overhaul of HSBC since he took over in September 2024. Elhedery has reorganised the bank along East-West lines, exited sub-scale investment banking operations in the United States and Europe, and reduced senior management ranks. HSBC last week agreed to sell its Singapore insurance unit to Allianz and in May struck a deal to divest retail and wealth operations in Indonesia to Oversea-Chinese Banking Corp.aol+1

HSBC said it would retain and grow its corporate and institutional banking, private banking, and asset management operations in Australia. The bank is only a minor player in Australia's A$2.5 trillion mortgage market, which is dominated by the country's "Big Four" banks.businesstimes+1

Market Backdrop

The transaction comes amid softening demand in Australia's housing market. National Australia Bank reported on Thursday that mortgage applications dropped 15 percent in the June quarter, while Westpac said in June that applications had declined 10 percent since the government's May budget. Higher borrowing costs and recent tax changes have weighed on investor activity.bloomberg+1

HSBC's Hong Kong-listed shares rose to an all-time high on Friday following the announcement. Citigroup ↗ 4.08% acted as financial adviser for HSBC on the transaction.businesstimes+1