London-based HSBC will shed its Argentina business and take a $1 billion loss on the disposal.
HSBC has agreed to sell its Argentina business to Grupo Financiero Galicia for $550 million, according to a statement. The deal includes HSBC Argentina's businesses in banking, asset management and insurance alongside $100 million of subordinated debt issued by the bank.
The transaction will result in a $1 billion pre-tax loss for HSBC which will be recognized in the first quarter of 2024.
Earnings Volatility
According to HSBC CEO Noel Quinn, the sale of the Argentinian business will reduce earnings volatility for the British lender.
«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,» he said. «Galicia is better placed to invest in and grow the business.»
Asia Pivot
The sale is in line with HSBC’s pivot towards Asia where it will shift capital towards growth markets like China and India. Within the Americas, the bank noted that it will remain committed to Mexico and the US.
«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 added.
