HSBC exploring the sale of its Brazil operation

Europe’s largest bank is retreating from unprofitable markets to reduce costs

HSBC, Europe’s largest bank, said it’s exploring the sale of its Brazil operation. Photo: PA Wire

HSBC, Europe’s largest bank, said it’s exploring the sale of its Brazil operation. Photo: PA Wire

 

HSBC, Europe’s largest bank, said it’s exploring the sale of its Brazil operation among strategic options for the unit as it retreats from unprofitable markets to reduce costs.

No decision has been made and “various” strategic options are being considered, the London-based lender said in a statement Friday.

The sale may raise about $4 billion and the bank will probably pick a preferred bidder as early as mid-June, people with knowledge of the matter said on May 12.

Interested banks include Brazil’s Banco Bradesco and Grupo BTG Pactual, Spain’s Banco Santander and Bank of Nova Scotia from Canada, the people said at the time. Industrial and Commercial Bank of China and China Construction Bank are also assessing the deal, one of the people said.

HSBC chief executive officer Stuart Gulliver, 56, has cited Brazil, Mexico, Turkey and the US as potential markets to exit as he seeks ways to cut costs and shore up earnings.

HSBC has sold or shuttered about 77 businesses since 2011, with regulators increasing scrutiny of balance sheets and demanding higher capital buffers against risky assets. Goldman Sachs Group Inc. is advising on the sale, the people said.

HSBC’s Brazil unit is the seventh-largest bank in the country, according to Deutsche Bank analyst Tito Labarta. It has about 850 branches, assets of 145.7 billion reais ($43 billion) and posted a loss of 441 million reais in 2014, according to its annual report.

Bloomberg