Talks reportedly in final stages as Elhedery continues to focus giant lender
HSBC is negotiating the sale of more than A$30bn (£15.8bn) of Australian home loans and consumer debt to Blackstone's private credit division, according to the Australian Financial Review's Street Talk column, which broke the story on Monday. Talks are said to be in their final stages, days before HSBC reports interim results on 4 August. The same Blackstone unit that arranged a £7.5bn financing deal for Firmus Group is understood to be finalising terms, with Mallesons acting for Blackstone and Citi and Allens advising HSBC.
Neither HSBC nor Blackstone has commented publicly, and the report remains unconfirmed.
A deal would give Blackstone its first foothold in Australian home lending, a market private credit funds have been eyeing for some time. Westpac's sale of its £11.2bn RAMS mortgage book last year attracted bids from KKR, Apollo and Cerberus, and Street Talk reports the same names resurfaced when Citi launched a fresh auction of HSBC's book this year, after London scaled back an earlier, broader sale process. An attempt to sell HSBC Australia's entire retail arm – loans and deposits together – to National Australia Bank or Macquarie had fallen through previously.
It's a pattern UK brokers will recognise. Banks are pulling back from capital-intensive lending, and private credit is picking up the slack. HSBC's UK mortgage book has been growing even as the wider group restructures under chief executive Georges Elhedery, who has already put HSBC's Australian retail bank up for sale and cut back its corporate lending there. Reports on the Australian deal point to thin margins on the mortgage book as the reason for the sale: loans that offer weak returns for a regulated bank can still be profitable for a private credit fund that isn't holding the same capital against them.
Private credit has already moved deep into UK real estate lending as banks retreat from the space. That growth hasn't come without problems: the collapse of bridging lender Market Financial Solutions earlier this year left Barclays facing losses of up to £600m, and prompted an FCA investigation. For brokers already placing more cases with non-bank lenders such as LendInvest, the HSBC-Blackstone talks are a reminder of how much mortgage lending is migrating away from banks altogether.
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