LONDON (dpa-AFX) - HSBC Latin America B.V., a wholly-owned subsidiary of HSBC Holdings plc (HSBA.L, HSBC), has recently signed a binding agreement with Grupo Financiero Galicia to sell its business in Argentina. The agreement involves the acquisition of all of HSBC Argentina's business, which includes banking, asset management, and insurance.
The deal also encompasses US$100 million of subordinated debt issued by HSBC Argentina and held by other HSBC entities.
The consideration for the acquisition amounts to US$550 million, 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.
The transaction is subject to conditions, including regulatory approvals, and is expected to be completed within the next 12 months. Further, the company stated that 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.
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.'
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