a8239j
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
For the
month of April
HSBC Holdings plc
42nd
Floor, 8 Canada Square, London E14 5HQ, England
(Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F).
Form
20-F X Form 40-F
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
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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
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
HSBC
Holdings plc
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By:
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Name:
Aileen Taylor
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Title:
Group Company Secretary and Chief Governance Officer
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Date:
09 April 2024
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