Michelle ThompsonHSBC has confirmed its agreement to sell its operations in Argentina to Grupo Financiero Galicia, the largest private financial group in the country, for $550 million, as announced by the UK-based bank on Tuesday.
This decision aligns with HSBC’s strategic shift towards focusing more on its operations in Asia, following a restructuring plan unveiled in 2021. The move also reflects the bank’s ongoing efforts to streamline its businesses, including scaling down operations in regions such as the United States and France.
Noel Quinn, CEO of HSBC, described the Argentine unit as primarily focused on domestic operations, with limited integration into the bank’s broader international network. He noted that the unit has been subject to significant earnings volatility.
Analysts interpreted HSBC’s exit from the Argentine market as consistent with its broader strategy of withdrawing from regions where it has faced challenges, such as France and Canada. Will Howlett, a financial analyst at Quilter Cheviot, characterized the divestiture as part of HSBC’s pattern of streamlining operations.
Quinn emphasized that the sale represents another important step in HSBC’s strategic shift towards pursuing higher-value opportunities across its international network.
However, the sale is expected to result in a $1 billion pre-tax loss for HSBC in the first quarter of the year.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, noted that while the financial impact of the sale would be short-term, investors would likely be relieved that HSBC is following through on its plans to streamline operations.
Additionally, HSBC’s earnings have been affected by its China business, with the bank reporting a significant decline in quarterly profit in February, partly due to its exposure to the troubled real estate sector in China.
