HSBC sheds Argentina business at $1bn loss in further Asia pivot

HSBC has agreed to sell its Argentina business to Grupo Financiero Galicia, the largest private financial group in Argentina, for $550m, according to a statement on 9 April. 

The deal, which will further shift the group's assets as a proportion to Asia, sees a $1bn pre-tax loss for HSBC which will be recognized in the first quarter of 2024.

It includes HSBC Argentina's businesses in banking, asset management and insurance alongside $100m of subordinated debt issued by the bank.

The statement said there would be "an insignificant impact on the Group’s common equity tier 1 (CET1) ratio by closing
At closing, c.US$4.9bn of historical cumulative foreign currency translation reserve losses will be recognised in the income statement – these have already been recognised in capital and will have no impact on CET1 or tangible net asset value. The transaction will be treated as a material notable item and excluded from the dividend payout calculation."

HSBC CEO Noel Quinn said the sale of the Argentinian business will reduce earnings volatility for the British lender: “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.

“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.

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

The deal is expected to be completed within the next 12 months.