HSBC Enters Agreement To Sell Some Latin American Businesses

Tom Burroughes

14 May 2012

Following its announcement last week that it was looking to sell businesses in Colombia, Peru, Uruguay and Paraguay,HSBC confirmed this move today, saying it has entered an agreement with the Colombian banking entity controlled by the Gilinski Group, Banco GNB Sudameris.

The sale amounts to a total consideration of $400 million in cash, subject to adjustment to reflect the net asset value in each of the businesses at completion.

The sale of the businesses is “part of the ongoing reduction in exposure to retail banking in markets where they have no critical mass”, said Christopher Wheeler, analyst at Mediobanca. He estimates that the firm has announced 29 closures/sales since last May’s Investor Day presentation.

The agreement is subject to regulatory approvals in each jurisdiction, as well as other conditions. The sales of the businesses in Colombia and Peru are expected to complete in the fourth quarter of 2012 and the sales of the businesses in Uruguay and Paraguay are expected to complete in the first quarter of 2013, HSBC said in a statement.

At December 31, 2011, the businesses to be sold had 62 branches across the four countries and a gross asset value of $4.4 billion.

HSBC’s statement today, like its earlier statement last week, did not elaborate on whether private banking services will be affected, however; as disclosed on its own website, HSBC’s private bank caters to Latin American clients. Several items refer to case studies where the private bank has helped clients in the region.

As part of a streamlining drive to cut costs and focus on the most important markets, chief executive Stuart Gulliver intends to intensify focus on markets such as those of the Asia-Pacific region.