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HSBC Sells Argentine Business: Very Small Spread Positive

FINANCIALS

HSBC sells Argentine business, recognises loss on sale (USD1bn) but (marginally) derisks and simplifies group. If anything, a minor spread positive, we feel. The local entity’s sub debt is being subsumed by the buyer.


  • HSBC (HSBA LN) announced the sale of its Argentine business to GF Galicia (GGAL AR), the no.4 bank in Argentina (by deposits). HSBC was the no.9 bank with c.4% share so this helps Galicia into the top 3.
  • GF Galicia is paying USD550m for the business (around 10% of its own market cap) so this is significant for the acquirer but not for (USD150bn market cap) HSBC. The latter will recognise a USD1bn loss-on-sale but the FX losses in reserves are already excluded from regulatory capital so this realisation has little capital effect (company says <0.1pp of CET1).
  • HSBC is in the process of derisking and simplifying the group, this is a logical step and, whilst very small, every little helps.
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