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SAO PAULO, April 13 (Reuters) - HSBC Holdings Plc is amongglobal lenders facing pressure to exit underperformingbusinesses in emerging markets nations from Brazil and Mexico toSouth Korea, creating opportunities for local banks to assertcontrol of their home turf, analysts at UBS Securities said onMonday.
Besides HSBC, global banks such as Citigroup Inc and Standard Chartered Bank Plc have expressedinterest in exiting units chiefly viewed as substandard andunderperforming businesses, UBS strategist Philip Finch said ina client note.
In the case of HSBC, Chief Executive Officer Stuart Gulliveris facing pressure to reshape the business focus of Europe'slargest bank. He recently told investors at a conference callthat operations in Mexico, Brazil, the United States and Turkeypose "the biggest problems" for HSBC.
According to Finch, Canada's Bank of Nova Scotia ranks among potential candidates to buy HSBC's Mexican andBrazilian units. Citing recent media reports, he added Brazil'sItaú Unibanco Holding SA, which is the largest LatinAmerican bank by market value, to the list after a top exectuiveexpressed interest in expanding in Mexico late last year.
The report underscores the growing interest among Canadian,Mexican and Brazilian lenders to grow in Latin America as morerestrictive capital rules make it harder for global lenders toexpand across emerging markets at the pace of previous years.
Likewise, as more global banks look to dispose more LatinAmerican assets that underperform, there will be moreopportunities for domestic banks to take back market share andunderpin growth, Finch noted. Banks leading market consolidationcould benefit from increased pricing power and higher returns
"We expect to see more banks with cross-border exposuredispose of underperforming assets, including those that may havepreviously been considered as core businesses, in order tounlock value," the note said.
HSBC is Mexico's fifth largest bank with a market share ofabout 8 percent, Finch said, adding that the value of that unitcould be below $8 billion at this point. The bank's Brazilianunit, which last year generated negative return on equity of 5.4percent, could be worth between $4.7 billion and $6.2 billion,the note added. (Reporting by Guillermo Parra-Bernal Editing by W Simon)
