British financial giant HSBC is selling its AUSD 36 billion (USD 25.30 billion). Australian home and personal loan book to global asset manager Blackstone, in the world’s largest-ever home loan portfolio transaction.
The deal is the latest move in HSBC CEO Georges Elhedery’s overhaul of the financial biggie. He has so far cut management ranks, reduced costs, and shed non-core operations after assuming the top job in September 2024.
The sale of the Australian portfolio will close in the first half of 2027, subject to regulatory approvals. The portfolio will be held across the Blackstone Credit and Insurance, Tactical Opportunities, and Real Estate Debt Strategies funds.
HSBC has been a minor player in Australia’s AUSD 2.5 trillion mortgage market, which is dominated by the country’s “Big Four” banks. It does not operate a major retail branch network in the Trans-Tasman nation.
As per Blackstone, the loan portfolio would be managed by Pepper Money, an Australia-based non-bank lender. Established in 2000 as a specialist residential home loan lender in Australia, with a focus on delivering innovative home loan solutions, Pepper Money will work closely with the asset manager to facilitate a seamless transition from the British major and a consistent and positive borrower experience.
Dan Leiter, Head of International for Blackstone Credit & Insurance, said, “International expansion is a major priority for our private credit business. Blackstone’s global credit platform, deep origination capabilities, and long-standing relationships position us to deliver unique value to clients around the world. This marquee investment is a testament to the power of our franchise and our conviction in the growing opportunities in credit across Asia.”
Mike Culhane, Head of International Business Development for Asset-Based Finance, Blackstone Credit & Insurance, remarked, “We are pleased to invest in a high-quality Australian home loan portfolio while supporting a seamless transition for HSBC customers and helping them maintain competitively priced loans. With Pepper Money providing experienced local loan management, customers can continue to receive high standards of service. We strive to oversee this portfolio thoughtfully and with discipline and remain committed to Australia as a highly attractive market for long-term credit investment.”
Mario Rehayem, Chief Executive Officer of Pepper Money, said, “Pepper Money’s appointment as the loan manager reflects the strength of our established platform and our experience supporting customers across large, complex portfolios. For more than 26 years, we have both originated and serviced loans on behalf of third parties. With the scale, systems, and focus on customer care, we are well placed to provide a positive customer and partner experience through transition. Alongside Blackstone and HSBC, our focus will be on disciplined execution, continuity for customers, and clear, genuinely helpful support at every step.”
HSBC said it expected the sale would result in a loss of less than USD 100 million by the first half of 2027. The venture would incur about USD 300 million in restructuring costs linked to the retail wind-down.
It also expects to recognize about USD 300 million in foreign currency translation losses, with no impact on its CET1 ratio.
Since the 2008 global financial crisis, HSBC has been scaling back its worldwide footprint, exiting low-returning consumer banking activities in markets ranging from France and Greece to Canada. With Elhedery’s arrival, the pace of the winding-down process has increased significantly.
The bank, in July, agreed to sell its Singapore insurance unit to Germany’s Allianz SE. In May, it concluded a deal to divest its retail and wealth operations in Indonesia to Singapore’s Oversea-Chinese Banking Corp (OCBC).
HSBC said it would continue investing in its corporate and institutional banking businesses, moving away from consumer lending as part of the restructuring.
Blackstone, on the other hand, plans to continue deploying significant capital to tap Australia’s housing market, which is facing softer demand, with higher borrowing costs and tax changes weighing on investor activity.