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Banking giant HSBC streamlines, but not in Phila.

HSBC, a global banking giant with offices in 85 countries, is selling 195 branches in New York, unloading its U.S. credit-card operation in Wilmington, and trying to trim $2.5 billion to $3.5 billion in costs by the end of 2013.

HSBC, a global banking giant with offices in 85 countries, is selling 195 branches in New York, unloading its U.S. credit-card operation in Wilmington, and trying to trim $2.5 billion to $3.5 billion in costs by the end of 2013.

Yet the London bank recently spent nearly $2 million to refurbish its Arch Street branch in Chinatown, bringing it up to the global standards of HSBC Holdings P.L.C., with $2.7 trillion in assets on Sept. 30, one of the world's five largest banks.

HSBC has a second Philadelphia branch, at 15th and Market Streets, and another in Wilmington.

How does Philadelphia fit into the plans of HSBC, given the bank's pullback from so many U.S. operations?

"HSBC has really sharpened its focus in the U.S. market," to concentrate on "internationally connected" metropolitan areas, said Michael Privitera, senior vice president and Mid-Atlantic district director for HSBC. As examples of such regions, Privitera named Los Angeles, Houston, Miami, and Philadelphia.

With $11.6 billion in exports in the first half of 2010, the Philadelphia region ranked 11th in exports among U.S. metropolitan statistical areas, according to the most recent data from the International Trade Administration.

In dedicating itself to an international strategy - after an expensive detour into subprime lending with the 2003 purchase of Household International Inc. for $14.2 billion, HSBC is returning to its roots. The bank was founded in 1865 as the Hongkong & Shanghai Banking Corp. Ltd. in those two Chinese cities to finance trade among Europe, India, and China.

Trade is "in the DNA of this bank," said Steven Lotito, senior vice president and head of sales for HSBC's trade and supply-chain services in North America.

Lotito and Privitera said they see significant opportunity to sell more trade services in the Philadelphia region. The Northeast overall constitutes HSBC's biggest trade-services market in the United States in terms of revenue, HSBC said, but it declined to disclose revenues from the business.

HSBC said its biggest local customer for trade services is Huatai USA L.L.C., a West Conshohocken company that exports wastepaper to Asia. Huatai USA is a subsidiary of Shandong Huatai Paper Group in China, but it also supplies other companies' mills, said company president Stuart Polsky.

Polsky said HSBC had helped Huatai USA grow to an expected $150 million in shipments this year from zero four years ago. "They've made it very easy for us to operate in an international marketplace," he said.

When shipping goods overseas, "there's hundreds of things that can go wrong," Polsky said. "The buyer can walk away from the shipment. You might as well not think about suing somebody in China because in China there is no law," he said.

Huatai USA, which does the bulk of its shipping from New York, deals with such problems by securing letters of credit that are designed to ensure that Huatai USA will be paid within a specific time. Huatai USA typically has to have 10 documents, such as bills of lading, packing lists, and inspection certifications, in order to satisfy the terms of the letters of credit, Polsky said.

"What HSBC does for us, they check all our documents," Polsky said. "We give them a million in fees a year. It's big business."

HSBC has competition for trade services from all the big banks locally - including Wells Fargo, TD, PNC, and Citizens - but Polsky said HSBC has more direct connections with Chinese banks, including smaller institutions, than most.

For any company involved in international trade, "it's that relationship with the banks that is very important," said Linda Conlin, president of the World Trade Center of Greater Philadelphia, which supports its members' efforts to do business overseas.

The processing for trade services, such as those used by Huatai USA, is done in a Brooklyn office, where HSBC employs 90, Lotito said.

HSBC employs about 35 at branches in Philadelphia and Wilmington and in commercial lending offices that handle companies with at least $500 million in annual sales.

HSBC established a retail banking presence in Philadelphia in 1998, when it bought First Commercial Bank, which had offices in Chinatown and Upper Darby, for $23.8 million.

The First Commercial branch at 1027 Arch St. had $56.2 million in deposits on June 30, 1998, according to the FDIC. In June of this year, it had $451.3 million in deposits.

For some customers, the attraction is straightforward: being able to bank in one's native tongue. Branch manager Danny Chan said the office can handle seven languages.