Branch Assets and Liabilities Held for Sale

9 Months Ended

Sep. 30, 2021

Discontinued Operations and Disposal Groups [Abstract]

Branch Assets and Liabilities Held for Sale

In May 2021, as part of our Restructuring Plan we announced that we would take further actions to strategically reposition our Wealth and Personal Banking business to focus on the banking and wealth management needs of globally-connected affluent and high net worth clients through our Premier, Jade and Private Banking propositions. We will exit our mass market retail banking business, including our Personal and Advance propositions as well as retail business banking, and will rebrand approximately 20-25 of our retail branches into international wealth centers to serve our Premier and Jade customers. In conjunction with the execution of this strategy, we have entered into definitive sale agreements with third parties to sell approximately 90 of our retail branches along with substantially all residential mortgage, unsecured and retail business banking loans and all deposits in our branch network not associated with our Premier, Jade and Private Banking customers. Certain assets under management associated with our mass market retail banking operations which are managed by an affiliate will also be transferred. The remaining branches not sold or rebranded will be closed. As a result of entering into these sale agreements, assets and liabilities with an aggregate carrying value of approximately $2.9 billion and $10.1 billion, respectively, were transferred to held for sale during the second quarter of 2021. The lower of amortized cost or fair value adjustment upon transferring these assets to held for sale was not material.

Although the disposal group will be sold in multiple transactions that are expected to be completed by the first quarter of 2022, the actual time to complete these sales depends on many factors, including regulatory approval. The sales are expected to result in a gain upon completion. Revenues (net interest income and other revenues) associated with the disposal group represented approximately 7 percent of total consolidated revenues for both the three and nine months ended September 30, 2021, respectively. Income before tax associated with the disposal group was not material.

The following table summarizes the assets and liabilities in the disposal group classified as held for sale at September 30, 2021 in our consolidated balance sheet:


	September 30, 2021
	(in millions)
Loans held for sale(1)	$	2,610
Other branch related assets held for sale:
Lease ROU assets(2)	149
Properties and equipment, net	40
Cash and other assets	55
Total other branch related assets held for sale	244
Total branch assets held for sale(3)	$	2,854

Deposits held for sale	$	9,321
Other branch related liabilities held for sale:
Lease liabilities(2)	151
Other liabilities	9
Total other branch related liabilities held for sale	160
Total branch liabilities held for sale(3)	$	9,481

(1)Includes $99 million of commercial loans, $1,952 million of residential mortgage loans, $235 million of home equity mortgage loans, $182 million of credit card loans and $142 million of other consumer loans.

(2)At September 30, 2021, our lease ROU assets and lease liabilities, excluding the amounts transferred to held for sale, totaled $225 million and $325 million, respectively.

(3)The sale of this disposal group is expected to result in a net cash payment as the liabilities being assumed are greater than the assets being purchased.

In addition, mass market retail banking loans that will not be purchased in the transaction described above, including our remaining retail credit card portfolio, which collectively totaled $1.1 billion, were also transferred to held for sale during the second quarter of 2021 as we did not intend to hold these loans for the foreseeable future. The lower of amortized cost or fair value adjustment upon transferring these assets to held for sale was not material. See Note 8, "Loans Held for Sale," for additional details.

Releases of the allowance for credit losses on the loans transferred to held for sale discussed above during the second quarter of 2021 resulted in a reduction to the provision for credit losses of approximately $101 million ($100 million of which related to consumer loans) during the second quarter of 2021. See Note 7, "Allowance for Credit Losses," for additional details.