HSBC Announces Sale of Argentina Business to Grupo Financiero Galicia
HSBC Holdings plc (HSBC) announced that it has entered into a definitive agreement to sell its banking operations in Argentina to Grupo Financiero Galicia, the largest private financial group in Argentina.
The deal:
- Value: US$550 million, subject to adjustments.
- Completion: Expected within the next 12 months.
Financial impact for HSBC:
- Loss on Disposal: A pre-tax loss of US$1.0 billion will be recognized in the first quarter of 2024.
- Capital Impact: Insignificant impact on the Group's common equity tier 1 (CET1) ratio by closing.
- Income Statement Recognition: At closing, approximately US$4.9 billion of historical foreign currency translation reserve losses will be reflected in the income statement. However, these losses were already recognized in capital and will have no impact on CET1 or tangible net asset value.
- Dividend Exclusion: The transaction will be excluded from the dividend payout calculation.
HSBC Group Chief Executive's perspective:
"We are pleased to announce the sale of HSBC Argentina. This move aligns with our strategic focus, allowing us to concentrate resources on higher-value opportunities within our international network," stated Noel Quinn, HSBC Group Chief Executive.
Reasons for the sale:
- Limited Network Integration: HSBC Argentina operates primarily domestically and has limited connection to HSBC's broader international network.
- Earnings Volatility: Due to its size, Argentina's business generated significant earnings volatility for the Group when translated into US dollars.
- Grupo Financiero Galicia's Advantage: Galicia is better positioned to invest in and grow the business given its local presence.
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Date of record
9 April 2024
