The cash transaction is expected to close in the first quarter of 2010.
As part of the agreement, HSBC will enter into a loan servicing agreement for the remainder of its U.S. auto loan portfolio, which is in liquidation. In addition, HSBC will sell its auto finance loan servicing platform for $4 million.
HSBC Finance’s auto finance business had $7.7 billion in managed receivables as of June 30.
Under the terms of the sale, HSBC’s auto loan servicing facilities in San Diego and Lewisville, Texas, will be assigned to Santander and the majority of the 700 employees from those locations will be offered the opportunity to transfer to Santander beginning in the first quarter of 2010.
The Dallas-based Santander will provide servicing for the auto loans it purchases, as well as for the remaining HSBC auto loan portfolio.
“This agreement is an important step in our continuing efforts to proactively reduce the HSBC Finance portfolio, and at the same time offer opportunities for our employees with a company which has demonstrated a longer term commitment to the auto finance business,” said Niall Booker, CEO of HSBC Finance Corporation.