Grupo Financiero Galicia will purchase all of HSBC Argentina’s business operations, including banking, asset management and insurance, along with $100m of subordinated debt issued by HSBC Argentina and held by other HSBC entities
HSBC to sell its Argentinian business to Galicia. (Credit: Joshua Lawrence on Unsplash)
HSBC Latin America, a fully owned subsidiary of HSBC Holdings, has agreed to divest its Argentinian banking operations to Grupo Financiero Galicia, for a total of $550m.
Grupo Financiero Galicia is the largest financial services holding company based in Buenos Aires, Argentina, with more than 100 branches and 3,100 employees.
Under the terms of the agreement, Galicia will acquire all of HSBC Argentina’s business operations, including banking, asset management and insurance.
The Argentinian company will also buy $100m of subordinated debt issued by HSBC Argentina and held by other HSBC entities.
The proposed transaction is expected to be completed within the coming 12 months, subject to certain price adjustments based on gains or losses on HSBC Argentina’s securities portfolios.
HSBC Group chief executive Noel Quinn said: “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.”
HSBC will receive the transaction consideration of $550m in a combination of cash, loan notes and Galicia’s American Depositary Receipts (ADRs).
Galicia will issue ADRs such that they represent around half the consideration received and worth not more than a 10% interest in the company.
The proposed sale of the Argentinian banking business is an extension of HSBC’s efforts to strengthen its business and focus on its key Asian and European markets.
Recently, the bank has completed its previously announced C$13.5bn ($9.96bn) sale of its Canadian unit, HSBC Bank Canada, to Royal Bank of Canada (RBC).