NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR
INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION
Hong Kong Exchanges and Clearing Limited and The Stock
Exchange of Hong Kong Limited take no responsibility for the
contents of this document, make no representation as to its
accuracy or completeness and expressly disclaim any liability
whatsoever for any loss howsoever arising from or in reliance upon
the whole or any part of the contents of this
document.
9 April 2024
(Hong Kong
Stock Code: 5)
HSBC HOLDINGS PLC
HSBC agrees to sell its business in Argentina to
Grupo Financiero Galicia
· Consideration of
US$550m, subject to certain price adjustments
· US$1.0bn pre-tax loss on disposal recognised in the first
quarter of 2024
· Insignificant impact on the Group's CET1 ratio by
closing
· At
closing, which is expected in the next 12 months, c. US$4.9bn of
historical cumulative foreign currency translation reserve losses
will be recognised in the income statement - these have already
been recognised in capital and will have no impact on CET1 or
tangible net asset value
· The
transaction will be treated as a material notable item and excluded
from the dividend payout calculation
HSBC Latin America B.V., a wholly
owned subsidiary of HSBC Holdings plc, has entered into a binding
agreement to sell its business in Argentina to Grupo Financiero
Galicia ('Galicia'), the largest private financial group in
Argentina.
Noel Quinn, Group Chief Executive, said:
"We are pleased to agree the sale of HSBC
Argentina. 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."
Financial
terms
Galicia will acquire all of HSBC
Argentina's business covering banking, asset management and
insurance, together with US$100m of subordinated debt issued by
HSBC Argentina and held by other HSBC entities, for a consideration
of US$550m, which will be adjusted for the results of the business
and fair value gains or losses on HSBC Argentina's securities
portfolios during the period between 31 December 2023 and
closing.
HSBC expects to receive the purchase
consideration in a combination of cash, loan notes and Galicia's
American Depositary Receipts (ADRs), with ADRs accounting for
around half of the consideration received and representing less
than a 10% economic interest in Galicia.
Financial impact of
the sale
Financial impacts of the transaction
on the HSBC Group are currently expected to be (based on financials
as at 29 February 2024):
· A
US$1.0bn pre-tax loss upon reclassification of the business as held
for sale in the first quarter of 2024. There would be no tax
deduction on the loss recognised. Between signing and closing, the
loss on sale will vary by changes in net assets of the disposed
business and associated hyperinflation and foreign currency
translation, the fair value of consideration including price
adjustments, and migration costs.
· Insignificant impact on the Group's CET1 ratio by closing: an
initial reduction of around 0.1 percentage points in 1Q24 on the
recognition of the pre-tax loss on disposal, broadly offset by the
estimated reduction in RWAs (on a PRA basis) on closing.
· The
recognition in the income statement of c.US$4.9bn in historical
foreign currency translation reserve losses on closing. These
reserve losses have accumulated over many years and arise from the
cumulative translation of the Argentinian peso-denominated book
value of HSBC Argentina into US dollars, and are included in CET1
capital at each reporting period. During 2023, as a result of
devaluation in Argentina, foreign currency translation reserve
losses grew by US$1.8bn. These reserve losses have already been
recognised in capital; recognition in the income statement will
have no impact on CET1 or tangible net asset value.
As with the pre-tax loss upon completion, this
amount will vary between signing and closing principally due to
movements in the USD:ARS exchange rate.
The transaction will be treated as a
material notable item. The HSBC Group's dividend payout ratio
target remains at 50% for 2024, excluding material notable items
and related impacts. The HSBC Group continues to target a return on
average tangible equity in the mid-teens for 2024, excluding the
impact of notable items.
The transaction is subject to
conditions, including regulatory approvals, and is expected to be
completed within the next 12 months.
For and on behalf of
HSBC Holdings plc
Aileen Taylor
Group Company Secretary and Chief
Governance Officer
Further information
HSBC Argentina consists of a network
of over 100 branches, is operated by approximately 3,100 employees,
and services approximately one million customers. In 2023, it
generated US$774m revenues1, recognised US$107m in
expected credit loss charges, and incurred US$428m of operating
costs, resulting in US$239m profit before tax. At 29 February 2024,
it had total assets of US$4.7bn2, risk-weighted assets
of US$7.9bn3, and equity of US$1.4bn.
1
2023 figures converted from AR$ based on the
official US$:AR$ rate of $808.50, as of 31 December
2023.
2
February 2024 figures converted from AR$ based on
the official US$:AR$ of $842, as of 29 February 2024.
3
Including operational risk RWAs of US$1.0bn, which
are expected to phase out after completion in accordance with PRA
requirements
This announcement contains inside
information for the purposes of Article 7 of the Market Abuse
Regulation (EU) No 596/2014 (as it forms part of domestic law of
the United Kingdom by virtue of the European Union (Withdrawal) Act
2018). This announcement is made pursuant to the Inside Information
Provisions (as defined under the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited (the 'Hong
Kong Listing Rules') under Part XIVA of the Securities and Futures
Ordinance (Cap. 571) and Rule 13.09(2)(a) of the Hong Kong Listing
Rules.
Miscellaneous
The Board of Directors of HSBC
Holdings plc as at the date of this announcement
comprises:
Mark Edward Tucker*, Noel Paul
Quinn, Geraldine Joyce Buckingham†, Rachel
Duan†, Georges Bahjat Elhedery, Dame Carolyn Julie
Fairbairn†, James Anthony Forese†, Ann
Frances Godbehere†, Steven Craig
Guggenheimer†, Dr José Antonio Meade
Kuribreña†, Kalpana Jaisingh Morparia†,
Eileen K Murray†, Brendan Robert Nelson†,
David Thomas Nish† and Swee Lian
Teo†.
*
Non-executive Group Chairman
† Independent non-executive
Director
This announcement contains both historical and forward-looking
statements. All statements other than statements of historical fact
are, or may be deemed to be, forward-looking statements.
Forward-looking statements may be identified by the use of terms
such as 'expects,' 'targets,' 'believes,' 'seeks,' 'estimates,'
'may,' 'intends,' 'plan,' 'will,' 'should,' 'potential,'
'reasonably possible', 'anticipates,' 'project', or 'continue',
variation of these words, the negative thereof or similar
expressions or comparable terminology. HSBC has based the
forward-looking statements on current plans, information, data,
estimates, expectations and projections about, among other things,
results of operations, financial condition, prospects, strategies
and future events, and therefore undue reliance should not be
placed on them. These forward-looking statements are subject to
risks, uncertainties and assumptions about us, as described under
'Cautionary statement regarding forward-looking statements'
contained in the HSBC Holdings plc Annual Report on Form 20-F for
the year ended 31 December 2023, filed with the SEC on 22 February
2024 (the '2023 Form 20-F'). HSBC undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. In
light of these risks, uncertainties and assumptions, the
forward-looking events discussed herein might not occur. Investors
are cautioned not to place undue reliance on any forward-looking
statements, which speak only as of their dates. No representation
or warranty is made as to the achievement or reasonableness of and
no reliance should be placed on such forward-looking statements.
Additional information, including information on factors which may
affect the HSBC Group's business, is contained in the 2023 Form
20-F.
Investor enquiries to:
Neil Sankoff
+44 (0) 20 7991 5072
investorrelations@hsbc.com
Yafei Tian
+852 2899 8909
yafei.tian@hsbc.com.hk
Media enquiries to:
HSBC press office
+44 (0) 20 79918096
pressoffice@hsbc.com
Note
to editors:
HSBC Holdings plc, the parent company
of the HSBC, is headquartered in London. HSBC serves customers
worldwide from offices in 62 countries and territories. With assets
of US$3,039bn at 31 December 2023, HSBC is one of the world's
largest banking and financial services organisations.
HSBC Holdings plc
Registered Office and Group Head Office:
8 Canada Square, London E14 5HQ,
United Kingdom
Web: www.hsbc.com
Incorporated in England with limited liability. Registered in
England: number 617987