HSBC is hit for $1bn as it sells up in Argentina
HSBC’S first-quarter results will be hit by a $1billion (£790million) pre-tax loss after selling its Argentine bank to Grupo Financiero Galicia for £434.6million
Bosses said when the deal closes the lender will also have to take a £3.9billion hit from historic foreign exchange losses run up by HSBC Argentina. The results are out next month.
Grupo Financiero Galicia is Argentina’s largest privately owned financial business. It will pay HSBC using a mixture of cash, debt and shares.
Noel Quinn, HSBC chief executive, said the lender decided to sell up after concluding that its resources would be better spent elsewhere. HSBC has been shifting its focus and capital towards higher-returning Asian markets and international trade.
He added: “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.
“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.”
The bank added that the disposal and expected losses would have an “insignificant impact” on its financial strength.
Will Howlett, financials analyst at Quilter Cheviot, said: “While the loss is substantial, it’s important to note that it will not significantly affect the bank’s capital or dividend policy as these losses are not factored into HSBC’s 50% payout ratio.”