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HSBC (NYSE:HSBC) will sell its Argentina business for $550M to Buenos Aires-based Grupo Financiero Galicia and book a $1B pre-tax loss from the sale in Q1 2024.
The transaction will be treated as a material notable item and excluded from the dividend payout calculation, the bank said. The HSBC Group’s (HSBC) dividend payout ratio target remains at 50% for 2024.
The deal – expected to be completed in 12 months – includes HSBC (HSBC) Argentina’s banking, asset management and insurance operations, as well as $100M in subordinated debt.
This move is part of the bank’s shift in focus to Asian markets, althouh it remains committed to the U.S. and Mexico.
“HSBC Argentina is largely a domestically focused business, with limited connectivity to the rest of our international network,” said HSBC (HSBC) Group CEO Noel Quinn. “Given its size, it also generates substantial earnings volatility for the group when its results are translated into U.S. dollars. Galicia is better placed to invest in and grow the business.”
Galicia is the largest private financial group in Argentina, while its banking operations are the fifth largest.
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