(Alliance News) - HSBC Holdings PLC on Wednesday said terms for the sale of its French unit, which were put in doubt by rising interest rates, have been agreed.
The Asia-focused lender will now retain a portfolio of EUR7.0 billion of home loans. The portfolio was originally slated to be sold. It may mull selling the portfolio "at a suitable time".
HSBC had agreed to sell its French business for a nominal sum back in June 2021. However, in April of this year, it said the business was no longer held for sale as interest rate increases meant buyer My Money Group would need to inject more capital to obtain regulatory approval for the deal. My Money is part of private equity firm Cerberus Capital Management LP.
My Money will inject EUR225 million worth of capital at transaction close, according to new terms agreed on Wednesday. HSBC will invest in My Money's holding company, to the tune of EUR407 million, for a participation interest worth 1.25 times the amount invested.
HSBC expects to incur a EUR2.7 billion pretax loss on sale, including around EUR2.2 billion to be recognised in the second half of 2023.
HSBC and My Money are aiming to close the deal on January 1.
Shares in HSBC were 0.2% lower at 609.50 pence each in London on Thursday morning.
By Eric Cunha, Alliance News news editor
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HSBC Holdings (HSBA)