LONDON (AFP) – HSBC on Friday said it will incur a hefty charge of EUR1.9 billion with the sale of its French retail banking operations to French lender My Money Group.
It comes as the Asia-focussed banking giant is exiting also the retail sector in the United States (US).
London-headquartered HSBC said in a statement that the French sale, for a nominal one euro, would generate an estimated pre-tax loss of EUR1.9 billion. The business comprises 244 retail branches, serving 800,000 customers at the end of last year.
HSBC said that about 3,900 employees would transfer to the buyer. “The signing… for the potential sale of our French retail banking business represents a significant step in progressing the actions we announced during our strategic update earlier this year,” said HSBC Chief Executive Noel Quinn.
He said it would allow HSBC to “dramatically simplify” its business in mainland Europe.
“We are committed to remaining as a leading international wholesale bank in continental Europe, capitalising on our global network and serving our multinational customers,” Quinn added in the statement. The bank aims to complete the sale in the first half of 2023. HSBC last month announced plans to exit the retail and small business banking market in the US.
Of its 148 US branches, 90 are to be sold, including to Citizens Bank and Cathay General Bancorp. The bank plans to turn about 20 locations into international centres dedicated to high net worth individuals, and gradually wind down the remaining 35-40 branches.
HSBC recently announced a doubling of first-quarter profits, helped by a reversal in credit losses as well as its ongoing restructuring. It followed a tumultuous year that saw its fortunes take a hammering from the coronavirus pandemic.
HSBC makes 90 per cent of its profit in Asia, with China and Hong Kong the major drivers of growth.
In February, it published a new strategy laying out plans to redouble its attempt to seize more of the Asian market. Weighed down by low interest rates, it is planning to seek out more fee-based income, especially wealth management for Asia’s increasingly affluent.