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HSBC Agrees To Sell Its French Retail Bank At A Hit Of $2.3 Bln

HSBC Agrees To Sell Its French Retail Bank At A Hit Of $2.3 Bln
The British bank HSBC will be selling its French retail bank to Cerberus-backed My Money Group. The deal would result in a loss of about $2.3 billion for the British lender but will also bring an end to its lengthy effort of disposing this European business unit as it is now more focused on the Asian market.
This is another measure in a broader strategy taken by HSBC to move out of the slow-growing European and North American markets where the bank has been unable to compete with the larger domestic banks.
On the other hand, Cerberus is continuing on its bank acquisition and stake buying spree with the private equity fund based in the United States already owning large stakes in Deutsche Bank and Commerzbank.
The latest deal includes acquisition of 244 branches, around 3900 staff and 24 billion euros in assets of HSBC by My Money which will propel My Money in one go to what it described will be a new challenger bank in France's crowded retail banking landscape.
"Our aim would be for the bank to return to profitability, three years after we have taken control of it," My Money Chief Executive Eric Shehadeh said in a statement.
HSBC said that the sale price would be a nominal 1 euro and added that at the time when the deal would be completed, the business would have a net asset value of $2 billion. The British bank has also agreed to make up any shortfall of there is any decline in that valuation.
The Credit Commercial de France (CCF) brand would be resurrected by My Money, the company said. This brand was acquired by HSBC about 21 years ago for 11 billion euros in the bank’s efforts to gain market share in the one of the biggest markets of Europe. An investment of 200 million euros in the HSBC unit's technology infrastructure is also planned to be made by the acquiring company.
The two parties will need to consult employees about the deal also according to French law and if the two parties then decide to go ahead with the deal, it could most probably be inked down on paper in the third or fourth quarter of the current year and expected to be completed in 2023.
My Money was a "responsible employer", Shehadeh said and assured that there will not be any job cuts till 2024 or 2025.
Other parts of its French business including its investment and business banking units would however be retained by HSBC.
This deal is also the second significant exit of HSBC from a major Western market in this current year following the divestment of its retail banking business in the United States as a part of the wider strategy of the bank’s Chief Executive Noel Quinn to cut down on the losses of the bank in the markets where it has found it very difficult to gain profitability.,

Christopher J. Mitchell

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