World's largest-ever home loan portfolio transaction: Blackstone buys $25 billion Australian loans from HSBC

HSBC HSBA.L, 0005.HK is selling its A$36 billion ($25.30 billion) Australian home and personal loan book to global asset manager Blackstone BX.N, in the world's largest-ever home loan portfolio transaction.

The transaction, announced by the two companies on Friday, is the latest move in HSBC CEO Georges Elhedery's overhaul of the bank as he seeks to simplify operations, improve returns and redeploy capital toward higher-growth businesses.

Elhedery has cut management ranks, reduced costs and shed non-core operations since assuming the top job in September 2024 as he reshapes the bank's global footprint.

The Australian portfolio will be bought by Blackstone in a transaction expected to close in the first half of 2027, subject to regulatory approvals. Blackstone said the deal was the largest-ever sale of a home loan portfolio.

It said the loan portfolio would be held across the Blackstone Credit and Insurance, Tactical Opportunities and Real Estate Debt Strategies funds.

HSBC is only a minor player in Australia's A$2.5 trillion mortgage market, which is dominated by the country's "Big Four" banks.

The bank had not been able to make major inroads against its Australian retail rivals and does not operate a major retail branch network.

Blackstone said the loan portfolio would be managed by Pepper Money PPM.AX, a non-bank lender that operates in Australia. Pepper shares rose as much as 6% on Friday but the stock is down nearly 20% this year.

HSBC's Hong Kong shares rose 2.4% on Friday to an all-time high of HK$168.56, before losing some ground to be up 1.3% by 0328 GMT. The gains still outpaced a 0.6% fall in the Hang Seng Index .HSI.

IMPACT ON HSBC'S FINANCIALS

HSBC said it expected the sale would result in a loss of less than $100 million by the first half of 2027 and incur about $300 million in restructuring costs linked to the retail wind-down. It also expects to recognise about $300 million in foreign currency translation losses, with no impact on its CET1 ratio.

HSBC last week agreed to sell its Singapore insurance unit to Germany's Allianz SE ALVG.DE and in May struck a deal to divest its retail and wealth operations in Indonesia to Singapore's Oversea-Chinese Banking Corp OCBC.SI.

Since the 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.

Blackstone said separately that it has invested in Australia for nearly two decades and plans to continue deploying significant capital to tap the country's housing market.

HSBC said it would continue investing in its corporate and institutional banking business across Australia and New Zealand, moving away from consumer lending as part of the restructuring.

The transaction comes as Australia's housing market faces softer demand, with higher borrowing costs and tax changes weighing on investor activity.

Australian lender Westpac WBC.AX said in June mortgage applications had declined 10% since the government's May budget, while National Australia Bank NAB.AX on Thursday posted a 15% drop in applications in the June quarter.

($1 = 1.4231 Australian dollars)

-Reporting by Roshan Thomas in Bengaluru; Editing by Sahal Muhammed, Shilpi Majumdar and Sherry Jacob-Phillips and Muralikumar Anantharaman/Reuters