HSBC, a London-based bank, is expected to acquire Citigroup's China consumer wealth management business, which controls more than $3 billion in assets, according to two sources with knowledge of the matter.
The transaction, the financial details of which were not immediately known, will also see Asia-focused HSBC taking over a few hundreds of Citi's China-based staff, the sources said.
The deal could be announced as soon as next month, the two sources said, who could not be named as they were not authorised to speak to the media.
The acquisition adds to a list of moves made by HSBC to expand in China, one of its key markets, as Europe's largest lender vows to exit less profitable geographies to focus on its key revenue generator, Asia.
Western companies are losing interest in China due to the uncertainty surrounding doing business, with fewer banks increasing their presence in the face of weaker economic growth and new national security restrictions on data transfer.
HSBC's chairman, Mark Tucker, told Beijing officials during a visit in July that an ice-breaking spirit adopted by British businesses historically would help the UK and China overcome challenges and geopolitical tensions, a bank statement said.
The bank, which already runs wealth management and private banking services in the local market, has secured a first-of-its-kind fund distribution qualification granted to a foreign firm, giving it new opportunities in China's 28.8 trillion yuan fund market.
HSBC aims to tap its insurance brokerage network to kick off fund sales to wealthy Chinese people as soon as next month, the source said.
Citi's China wealth management operations, part of the retail banking business that has been looking to leave since 2021, serve wealthy clients in the world's second-largest economy with deposit, fund and structured product offerings.
The company's $3 billion in consumer assets is dwarfed by its Chinese and foreign peers such as Standard Chartered, which have more retail branches handling wealth management.
The bank's private banking services, catering to high net worth Chinese clients from the bank's locations outside of China, remain intact, the first source said. Citi is also considering setting up a securities brokerage unit in China.
In December, Citi said it was planning to sell some of its portfolios as it wound down its China retail banking operation, part of a strategy to pull out of consumer franchises in 14 markets in Asia, Europe, the Middle East, Africa and Mexico.
Citi is in the process of closing its South Korea operation and plans to complete the transfer of its Indonesian business to UOB Group. In August, it completed the sale and migration of its Taiwan consumer businesses.