HSBC is set to acquire leading US consumer credit provider Household International in a deal reportedly worth £9bn.
Founded in 1878, Household provides personal loans, credit cards, motor finance and credit insurance to customers across Canada, the UK and the US. The deal will see Household become a wholly-owned subsidiary of the HSBC Group and will promote the bank to become one of the top ten credit card issuers in the world.
In the UK Household operates primarily under the Beneficial and HFC brand names, with well-known brands Hamilton Direct Bank and marbles also falling within the group.
In recent years HSBC has been struggling to maintain its position in the UK credit card market and at the end of 2001 lost its position of fourth place in the market to star performer HBOS. The addition of HFC's credit cardholders, which is thought to be over 2.5 million, will certainly bolster its flagging performance.
On a more general note, the deal points to the continuing trend of consolidation in the UK credit card market. The last year alone has seen Barclaycard acquire Providian and Alliance & Leicester sell and outsource the management of its credit card portfolio to MBNA.
Helen Smith, Datamonitor financial services analyst, says: “Ultimately, the market looks certain to be dominated by small number of big hitters. The question is, which of the smaller players will fall next?”