(Alliance News) - HSBC Holdings PLC on Tuesday said it will sell its business in Argentina to Grupo Financiero Galicia SA, which it called the largest private financial group in the South American country.
The London-based, Asia-focused lender said the USD550 million sale of HSBC Latin America BV marked an important step in the execution of its strategy of focusing its resources on "higher value opportunities" across its international network.
Chief Executive Officer Noel Quinn said: "HSBC Argentina is largely a domestically focused business, with limited connectivity to the rest of our international network. Furthermore, given its size, it also generates substantial earnings volatility for the group when its results are translated into US dollars. Galicia is better placed to invest in and grow the business."
HSBC said the sale will have an insignificant impact on its Common Equity Tier 1 ratio by the time of its closing, which is expected to be within the next 12 months. The CET1 ratio compares a bank's capital against its risk assets, with a higher ratio being more financially sound.
HSBC said it will recognise a USD1.0 billion pretax loss on disposal in its first quarter results for 2024, which are scheduled for release on April 30. The Argentinian business will be reclassified as held for sale in those results.
The Argentine hit will be more than offset in HSBC's first-quarter accounts by a USD4.9 billion gain on the sale, completed late last month, of HSBC Bank Canada to Royal Bank of Canada. HSBC has said it will announce a special dividend of USD0.21 per share in its first quarter results, in addition to any interim dividend, to return some of the Canada gain to shareholders.
HSBC shares were 0.3% higher at 646.70 pence each on Tuesday morning in London.
By Tom Budszus, Alliance News slot editor
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