Two bidders have proposed to buy the French retail business for a symbolic €1, provided HSBC recapitalises it with at least €500m
HSBC headquarters, London. (Credit: HSBC Group)
HSBC is reportedly in final talks with two bidders, that include Cerberus and an undisclosed rival investment firm, pertaining to the sale of its French retail business.
The two bidders have offered a symbolic €1 to the British banking group on a condition that the latter injects over €500m into the French operations, reported Reuters, citing sources.
In October 2019, the publication reported that the bank had engaged financial advisory and asset management firm Lazard to help sell its 270 retail branches in France. Prior to that, in September 2019, the bank launched a strategic review of its French retail operations, as per certain banking unions in the country.
Across its businesses, the British banking group has been implementing a strategy to reduce costs.
HSBC has found it difficult to find bidders for the French retail business
According to the publication, it has not been easy for the bank in drawing interest for its French retail business with bidders concerned with the large restructuring that is expected to be carried out and also the complex talks with domestic regulators.
Three sources told Reuters that certain French banks that had initially gone through HSBC’s dossier regarding the sale had all backed off, leaving just Cerberus and its rival investment firm as the only bidders.
One of the sources reportedly said that HSBC is working to arrive at an agreement by the end of 2020. However, the sale process may not go through because of regulatory challenges and the possibility of massive job reductions, as per another sources.
The British lender had been hit with a 69% drop in its profit after tax for the first six months of 2020 at $3.12bn compared to $9.93bn it reported in H1 2019.
Following the H1 2020 performance, HSBC is expected to fast track implementation of its previously announced restructuring initiative, which includes cutting nearly 35,000 jobs across its operations.