HSBC Group has announced the sale of its banking operations in Argentina to Grupo Financiero Galicia, the largest private financial group in the country. Valued at US$550 million, pending certain price adjustments, the deal is anticipated to finalize within the next 12 months.
Outlined by the agreement:
- A pre-tax loss of US$1.0 billion on disposal will be recorded in 1Q24.
- The Group’s common equity tier 1 (CET1) ratio will experience an insignificant impact upon closure.
- Approximately US$4.9 billion of historical cumulative foreign currency translation reserve losses will be acknowledged in the income statement at closing. These losses, previously recognized in capital, will not affect CET1 or tangible net asset value.
- The transaction will be treated as a notable material item and excluded from the dividend payout calculation.
HSBC Group Chief Executive, Noel Quinn, expressed satisfaction with the sale, stating, “We are pleased to agree the sale of HSBC Argentina. This transaction is another important step in the execution of our strategy and enables us to focus our resources on higher value opportunities across our international network.”
Quinn elaborated on the rationale behind the sale, citing HSBC Argentina’s primarily domestic focus and limited connectivity to the broader international network. Additionally, the business’s size contributes to substantial earnings volatility when translated into US dollars. Quinn expressed confidence in Grupo Financiero Galicia’s ability to invest in and expand the business.
HSBC remains dedicated to its operations in Mexico and the United States, reaffirming its commitment to serving international clients with leading transaction banking capabilities across its global network.