The muted investor applause for HSBC’s (HSBA.L), (0005.HK) latest disposal says it all. Its Hong Kong-listed shares ticked up less than 1% on news that it’s selling the bulk of its U.S. retail banking operations for a song, ending a long and costly attempt to make it in the American mass market. At least the deal removes a distraction that should help Chief Executive Noel Quinn focus where it matters most, in Asia. HSBC is transferring 80 East Coast branches, along with some $9 billion of related deposits and $2.2 billion in loans, to Citizens Financial (CFG.N) for a slim 2% premium on the deposits. Cathay General Bancorp (CATY.O) will take parts of the West Coast. The rest of the branches are being closed or turned into HSBC wealth management centres. Quinn candidly acknowledges the deals make sense because HSBC is too small to compete in the market. The numbers back him up. Neither his bank’s profit nor its risk-weighted assets will be materially affected by the transactions. It’s still a sad ending to a four-decade effort that included acquisitions ranging from Buffalo-based Marine Midland Bank in 1980 to Republic National Bank of New York for $10 billion in 1999. Ingloriously, HSBC’s best-remembered American deal is its $14 billion purchase of consumer lender Household Finance, which ended in ignominy following the global financial crisis. With that in mind, the decision to retain U.S. operations catering to the rich may seem foolhardy. But it is the current banking orthodoxy. Rival Citigroup (C.N), under new boss Jane Fraser, is shifting toward wealth management and well-to-do clients, while offloading consumer units in 13 markets because they aren’t big enough. HSBC’s sales support the logic: Citizens and Cathay will take 80% of HSBC’s 1.4 million U.S. customers, but only a fifth of the $48 billion in accounts. HSBC’s shares have gained about 20% this year, handily outperforming Hong Kong and London benchmarks, suggesting investors believe Quinn is heading in the right direction. Trading at a mere two-thirds of book value, however, also reflects some concerns. Shedding most of the U.S retail business marks another healthy step toward Asia, even as the American history provides a reminder of how slow it could be. Follow @JennHughes13 and @AntonyMCurrie on Twitter CONTEXT NEWS - HSBC said on May 26 that it would exit U.S. mass-market retail banking by selling parts of its operation and winding down others. - Citizens Financial agreed to buy HSBC’s East Coast business, including 80 branches, $9.2 billion of deposits and $2.2 billion of outstanding loans as of March 31. Cathay General Bancorp is buying the West Coast business with 10 branches, $1 billion of deposits and $800 million of outstanding loans as of March 31, HSBC said. - HSBC added that it expects to incur $100 million of pre-tax costs related to the transactions. - The risk-weighted assets associated with the deals were $1.8 billion as of March 31, and no material impact is expected on its core equity Tier 1 ratio. - HSBC will keep up to 25 branches as what it calls international wealth centres. Some 40 branches that are not part of the sales or the rebranding will be closed.