HSBC agrees new terms for delayed sale of French retail business as exit from global markets picks up pace
HSBC has agreed new terms for the sale of its French retail division to Cerberus-backed My Money Group, paving the way for the delayed sale to be completed early next year.
Under the new terms of the deal, Cerberus will invest €225m (£192.5m) into the business while HSBC will retain a €7.0bn portfolio of loans which were originally going to be transferred.
The bank said it will take a €100m hit from the costs of retaining the loans. It may sell this portfolio at a later date.
HSBC will also invest up to €407m in My Money’s holding company in exchange for a profit participation interest of 1.25 the amount it ends up investing.
The transaction is expected to lead to a pre-tax loss on sale of up to $2.7bn for HSBC, up from $2.3bn when the deal was first announced. This will be recognised in the second half of this year.
It said the changes “do not alter the underlying rationale for the transaction”, which will enable HSBC to focus on its international wholesale business.
The signing of the MOU has been approved by the boards of all parties.
The deal, initially announced back in 2021, was postponed earlier this year as rising rates forced Cerberus-backed My Money to stump up more cash.
Under the terms of the agreement, My Money would have acquired 244 retail branches and around 3,900 employees for the notional fee of €1.
My Money hoped to create an “exciting and diverse challenger bank” in the French retail market.
HSBC has been withdrawing from underperforming markets around the world in recent months, including Canada and Greece. It is aiming to pivot to Asia, where it makes the majority of its money.
There are likely to be more withdrawals to come. In an interview with Reuters earlier this year, finance chief Georges Elhedery said the bank is considering exiting as many as a dozen countries as it pivots towards Asia.