HSBC is selling its business in Argentina, incurring a $1 billion loss on the deal, as part of its strategy to focus on Asia by simplifying its operations.
The sale includes banking, asset management, and insurance services and is being made to Argentina’s Grupo Financiero Galicia for $550 million.
CEO Noel Quinn has been streamlining the bank by exiting markets like France and Canada.
The move aligns with HSBC’s shift in capital towards India and China, part of its broader Asia pivot strategy.
The sale comes amid strong U.S. Treasury yields, following a robust jobs report last Friday, which impacted HSBC’s performance in early trading.
Analyst Gary Greenwood noted that Argentina has been challenging for HSBC due to hyperinflation and sharp currency devaluation, causing significant earnings volatility.
In addition to the loss in the first quarter, HSBC will recognize $4.9 billion in historical currency translation reserve losses when the sale closes.
These losses, mainly due to the devaluation of the Argentine peso, have already been factored into the bank’s capital levels and will not impact its core capital or asset value levels.
Quinn stated, “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.”
He emphasized that HSBC Argentina’s domestic focus limited its connectivity to the rest of the bank’s international network.
Despite the sale, HSBC remains committed to the United States, where it exited retail banking in 2021, and to Mexico, despite past issues with money laundering controls that led to a $2 billion settlement with U.S. regulators in 2012.
