HSBC braced for $1bn loss on Argentina sale

HSBC is to offload its business in Argentina at a $1bn (£790m) loss as Javier Milei, the country’s new “anarcho-capitalist” president, fights hyperinflation.

The bank will sell HSBC Argentina to Grupo Financiero Galicia, the largest private lender in the country.

HSBC, which is selling the operation for $550m, will take a $1bn loss on the sale and book about $5bn of historical losses when the deal closes, as expected, within the next 12 months.

Its business in Argentina comprises 100 branches and 3,100 employees.

The bank said that its Argentinian arm has started to create volatility in its financial results.

It booked a $500m charge for hyperinflation in Argentina in February after translating HSBC Argentina’s earnings in pesos into US dollars.

Noel Quinn, chief executive of HSBC, said exiting the country would allow the bank to focus on better opportunities.

“HSBC Argentina is largely a domestically focused business, with limited connectivity to the rest of our international network,” he added. “Furthermore, given its size, it also generates substantial earnings volatility for the Group when its results are translated into US dollars.

“We remain committed to Mexico and the US, and to serving our international clients throughout our global network with our leading transaction banking capabilities.”

Gary Greenwood, an analyst at Shore Capital, said: “Argentina has been a problematic market for HSBC in recent years. We do not expect it to have a material impact on the valuation of the stock or the investment case.”

HSBC has this year sold its Canadian business and its French retail business.