HSBC Holdings PLC's North American arm is undergoing a change at the top as it moves past its problems with a toxic subprime lending arm.

Brendan McDonagh, the chief executive of HSBC North America Holdings Inc., is retiring July 31 after winning credit for turning around the global finance giant's operation in the U.S. and Canada, which was hobbled by a troubled consumer lending business it bought before the recession.

McDonagh, 51, will be replaced by a top deputy, Niall Booker, also 51, another 30-year veteran of the London conglomerate. They have spent the past few years correcting HSBC's blunders in the U.S.

HSBC, which runs the fifth-largest bank in the U.S. by assets, described the change as a simple succession matter; market watchers say that seems to be the case, as the parent company has been busy positioning its next generation of top executives for some time.

The Financial Times, citing unnamed sources, reported Monday that McDonagh is stepping aside because he does not believe he ultimately could become chief executive of the entire company. A spokeswoman for HSBC said in an e-mail that the company would not comment on "speculation others may have" made and described McDonagh's retirement as a "personal decision."

HSBC executives are eligible to retire in their early 50s, and analysts say it is unlikely McDonagh has been pushed out. Since taking over the $345 billion-asset HSBC North America in February 2008, his team has gotten a grip on its consumer loan losses while extending the reach of its 480-branch retail bank, analysts said.

"Brendan has done a good job. … My reading is that he has done what's been asked of him; I don't know what's behind his retirement," said Michael J. Trippitt, an analyst with Oriel Securities Ltd. in London. "As far as Booker's appointment is concerned, it's entirely logical."

Booker and McDonagh were unavailable for comment.

The two are viewed as highly loyal employees that seem to have been groomed for top roles, having both served as international managers in the Middle East, among other places. They were also point men for dealing with HSBC's biggest headache in the U.S., a subprime lender it purchased in 2003 called Household International, which is now known as HSBC Finance Corp. The other main division of HSBC North America is the retail and commercial arm, HSBC Bank USA.

HSBC Finance closed its 800 branches and stopped making new loans last year. It is in the process of running off billions of dollars worth of undesirable mortgages and auto loans, something that will take years. While the unit continues to lose money, its credit costs fell last quarter as it ran off $5.6 billion in loans and more borrowers paid down their home and credit card loans.

Booker is the CEO of HSBC Finance, which had a loss of more than $600 million last quarter. McDonagh ran HSBC Finance from 2007 to 2008. HSBC USA, meanwhile, earned $554 million.

It's unclear what McDonagh's retirement plans are, although market watchers say he has a lot of options given his relative youth and experience. An avid skier and golfer with grown children, the native of Ireland reportedly enjoys living in the U.S. since moving here in 2002. He is involved with numerous business and civic groups in his new hometown of Chicago.

"I'm sure somebody else will pick him up soon," said Tim Blake, who runs an online consumer advocacy group called HSBC Watch that has been critical of HSBC Finance's lending practices. Blake said it's likely McDonagh is simply ready to move on after the stressful job of getting things in order in the states. "His thing has run its course," he said.

Booker, an ancient history buff with a reputation for being intelligent and highly competitive, is expected to stay the course when it comes to HSBC's strategy in the U.S. HSBC's emphasis here has been its profitable credit card business and international-related consumer and commercial banking products. HSBC has also said it does not plan on investing in any more acquisitions or branch openings in the U.S. while it focuses on organic growth.

"I don't think [this management change] signals any particular change of strategy," said Mark Phin, an analyst with KBW Inc.'s Keefe, Bruyette & Woods Inc. in London.