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HSBC Wraps Up Sale of France-Based Retail Banking Business
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HSBC Holdings (HSBC - Free Report) has completed the divestiture of its France-based retail banking business. The company sold the business to Crédit Commercial de France (“CCF”), a subsidiary of My Money Group, after receiving all the necessary regulatory approvals.
Noel Quinn, HSBC CEO, said, “This represents an important milestone in our strategic vision for Europe. I am delighted with this positive start to 2024 - our team in Europe will continue with the aim of becoming the leading international wholesale bank in Europe, complemented by a targeted Wealth and Private Banking business.”
HSBC initially announced the transaction in June 2021 after conducting a review of the retail unit and finding it to be unprofitable. However, in April 2023, the company said that the deal closure had become less certain owing to the unexpected rise in interest rates in France, which “significantly increased” the capital requirements for the buyers at closing.
Following this, in June 2023, HSBC tweaked the terms of the deal. Per the revised agreement, the company will retain a €7 billion ($7.6 billion) portfolio of home loans it had originally expected to sell to My Money Bank, while CCF will inject €225 million of additional capital into the business. At the end of 2022, the France-based business had a total loan book of €23.4 billion.
The revised term is expected to result in a cumulative pre-tax loss on sale of up to €2.2 billion, including an estimated up to €2.0 billion, likely to be recognized during the second half of 2023.
Of late, HSBC has been conducting a significant strategic overhaul, with a main focus on strengthening business in the Asia region. The company intends to position itself as a top bank for high-net-worth and ultra-high-net-worth clients in the region.
In sync with this, in October 2023, HSBC announced a deal to acquire Citigroup's (C - Free Report) retail wealth management business in China. As a result of the sale, C will transfer assets under management and deposits worth approximately $3.6 billion (as of August 2023) and the associated wealth customers in 11 major cities to HSBC Bank China.
Further, HSBC re-launched its private banking business in India after eight years. In 2022, the company acquired 100% of the issued share capital of AXA Insurance in Singapore and L&T Investment Management Limited.
As a part of its drive to focus on Asia, HSBC is exiting several less profitable markets. The company entered into an agreement to sell its Canada banking business in November 2022 (expected to close in the first quarter of 2024) to Royal Bank of Canada (RY - Free Report) . Last month, Canada gave the final approval to the proposed divestiture, which is conditioned on several steps to be taken by RY following the completion of the deal.
HSBC has already exited from the United States and Greece retail banking space and is in the process of divesting its retail banking operation in New Zealand as well as fully exiting Russia.
In 2023, shares of HSBC on the NYSE rallied 30.1%, outperforming the industry’s growth of 20.3%.
Image: Bigstock
HSBC Wraps Up Sale of France-Based Retail Banking Business
HSBC Holdings (HSBC - Free Report) has completed the divestiture of its France-based retail banking business. The company sold the business to Crédit Commercial de France (“CCF”), a subsidiary of My Money Group, after receiving all the necessary regulatory approvals.
Noel Quinn, HSBC CEO, said, “This represents an important milestone in our strategic vision for Europe. I am delighted with this positive start to 2024 - our team in Europe will continue with the aim of becoming the leading international wholesale bank in Europe, complemented by a targeted Wealth and Private Banking business.”
HSBC initially announced the transaction in June 2021 after conducting a review of the retail unit and finding it to be unprofitable. However, in April 2023, the company said that the deal closure had become less certain owing to the unexpected rise in interest rates in France, which “significantly increased” the capital requirements for the buyers at closing.
Following this, in June 2023, HSBC tweaked the terms of the deal. Per the revised agreement, the company will retain a €7 billion ($7.6 billion) portfolio of home loans it had originally expected to sell to My Money Bank, while CCF will inject €225 million of additional capital into the business. At the end of 2022, the France-based business had a total loan book of €23.4 billion.
The revised term is expected to result in a cumulative pre-tax loss on sale of up to €2.2 billion, including an estimated up to €2.0 billion, likely to be recognized during the second half of 2023.
Of late, HSBC has been conducting a significant strategic overhaul, with a main focus on strengthening business in the Asia region. The company intends to position itself as a top bank for high-net-worth and ultra-high-net-worth clients in the region.
In sync with this, in October 2023, HSBC announced a deal to acquire Citigroup's (C - Free Report) retail wealth management business in China. As a result of the sale, C will transfer assets under management and deposits worth approximately $3.6 billion (as of August 2023) and the associated wealth customers in 11 major cities to HSBC Bank China.
Further, HSBC re-launched its private banking business in India after eight years. In 2022, the company acquired 100% of the issued share capital of AXA Insurance in Singapore and L&T Investment Management Limited.
As a part of its drive to focus on Asia, HSBC is exiting several less profitable markets. The company entered into an agreement to sell its Canada banking business in November 2022 (expected to close in the first quarter of 2024) to Royal Bank of Canada (RY - Free Report) . Last month, Canada gave the final approval to the proposed divestiture, which is conditioned on several steps to be taken by RY following the completion of the deal.
HSBC has already exited from the United States and Greece retail banking space and is in the process of divesting its retail banking operation in New Zealand as well as fully exiting Russia.
In 2023, shares of HSBC on the NYSE rallied 30.1%, outperforming the industry’s growth of 20.3%.
Image Source: Zacks Investment Research
Currently, HSBC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.