HSBC has reached a deal to sell its banking operations in Argentina to Grupo Financiero Galicia, the largest private financial group in Argentina. The sale, valued at US$550m with certain price adjustments, is expected to be finalized within the next 12 months. As a result of this transaction, HSBC will record a pre-tax loss on disposal of US$1.0bn in the first quarter of 2024. However, there will be minimal impact on the Group’s common equity tier 1 (CET1) ratio at closing. Additionally, about US$4.9bn of historical cumulative foreign currency translation reserve losses will be recognized in the income statement at closing, with no effect on CET1 or tangible net asset value. This transaction will be considered a material notable item and will be excluded from the dividend payout calculation.
HSBC Group Chief Executive Noel Quinn expressed his satisfaction with the sale of HSBC Argentina, seeing it as an essential move in executing the company’s strategy and allowing them to focus on more lucrative opportunities within their international network. He highlighted that HSBC Argentina’s business is mainly domestic-focused and lacks significant connectivity to the rest of the global network. The size of the business leads to substantial earnings volatility for the Group when translated into US dollars, making Galicia better suited to invest in and expand the operations.
Despite selling its banking operations in Argentina, HSBC remains committed to its presence in Mexico and the US and serving international clients through their global network’s transaction banking capabilities. For more details about this transaction, refer to our stock exchange announcement (PDF 123KB).
