Branch Assets and Liabilities Held for Sale

12 Months Ended

Dec. 31, 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 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 to one of the buyers. 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. We completed the sale of the disposal group in February 2022 which is expected to result in a gain on sale.

During 2021, we recorded $8 million of transaction costs directly associated with these sales, which are reflected in other income (loss) in the consolidated statement of income (loss). Revenues (net interest income and other revenues) associated with the disposal group represented approximately 7 percent of total consolidated revenues for the year ended December 31, 2021. 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 December 31, 2021 in our consolidated balance sheet:


	December 31, 2021
	(in millions)
Loans held for sale(1)	$	2,441
Other branch related assets held for sale:
Lease ROU assets	151
Properties and equipment, net	40
Cash and other assets	58
Total other branch related assets held for sale	249
Total branch assets held for sale(2)	$	2,690

Deposits held for sale	$	8,750
Other branch related liabilities held for sale:
Lease liabilities	144
Other liabilities	8
Total other branch related liabilities held for sale	152
Total branch liabilities held for sale(2)	$	8,902

(1)Includes $72 million of commercial loans, $1,845 million of residential mortgage loans, $217 million of home equity mortgage loans, $178 million of credit card loans and $129 million of other consumer loans.

(2)The sale of this disposal group will 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 not included in the transaction described above as well as 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. During the fourth quarter of 2021, we sold a portfolio of mass market retail credit cards to a third party and, upon completion of the sale, a portfolio of Premier credit cards was transferred back to held for investment. See Note 9, "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 8, "Allowance for Credit Losses," for additional details.