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HSBC has agreed to sell its operations in hyperinflation-plagued Argentina in a deal that will have a multi-million pound hit on its profits.
Boss Noel Quinn said the bank’s business in the South American country has generated “substantial earnings volatility” for the wider group.
The sale to Argentina’s Grupo Financiero Galicia, the country’s fifth-largest lender, comes as Quinn seeks to rationalize the global group, which is increasingly focused on Asia.
It follows previous disposals of its businesses in France and Canada.
Meanwhile, Argentina’s radical president – the self-described “anarcho-capitalist” Javier Milei – is fighting to reduce the country’s 276 percent inflation rate by cutting spending, while interest rates remain at a painful 80 percent.
HSBC boss Noel Quinn said the bank’s business in Argentina has generated “substantial earnings volatility” for the group as a whole.
HSBC Argentina, which covers banking, asset management and insurance, employs more than 3,000 people and has more than 100 branches.
The £430m sale of the business is expected to be completed within the next 12 months.
HSBC said it would take an £800m loss from the sale in its first quarter results this year, but the final figure will vary between now and the completion date depending on factors such as “hyperinflation and foreign currency conversion”.
The group also expects to absorb a £3.9bn hit related to the drop in the dollar value of the business caused by the fall in the peso in recent years. That figure increased by £1.4bn last year alone.
Quinn said: ‘HSBC Argentina is largely a domestically focused business, with limited connectivity to the rest of our international network.
‘In addition, given its size, it also generates substantial volatility in the group’s earnings when its results are translated into US dollars. Galicia is better placed to invest and grow the business.”
Quinn said the bank remained committed to the United States, where it exited retail banking in 2021, and to Mexico, where its business has in the past been overshadowed as a result of lax money laundering controls, resulting in a $1.6 billion fine. of pounds sterling. US regulators in 2012.
London-listed HSBC has faced pressure from investors over its global strategy.
Last year, it defeated a resolution by Hong Kong-based shareholders – backed by major Chinese investor Ping An – to spin off its Asia business.
Shore Capital banking analyst Gary Greenwood said: ‘Argentina has been a problematic market for HSBC in recent years.
Leaving Argentina also represents another step in management’s strategy to simplify the group.