Bloomberg News

HSBC Sells Three Units in Latin America for $801 Million

January 24, 2012

(Updates with company comment in seventh paragraph.)

Jan. 24 (Bloomberg) -- HSBC Holdings Plc agreed to sell its operations in Costa Rica, El Salvador and Honduras to Colombia’s Banco Davivienda SA for $801 million, as Europe’s largest bank focuses on bigger markets in Latin America.

HSBC had 136 branches serving corporate and consumer banking clients across the three countries and held $4.3 billion of assets, the London-based lender said today in a statement. The bank entered the countries in 2006 with its $1.77 billion acquisition of Groupo Banistmo SA. HSBC will retain branches in Panama, Colombia, Nicaragua and the Bahamas.

“The transaction demonstrates our commitment to driving growth and improving returns in Latin America by divesting of businesses that do not meet our investment criteria,” Antonio Losada, chief executive officer-designate of HSBC Latin America, said in today’s statement.

CEO Stuart Gulliver is reversing some of HSBC’s expansion over the past two decades, selling assets and cutting jobs, while reinvesting some of the proceeds in faster-growing markets. Gulliver said at an investor day in May he would limit consumer banking to where HSBC can “achieve scale as a full- scale retail banker,” and in Latin America concentrate on Brazil, Mexico and Argentina.

Colombian Banks

Today’s sale to Banco Davivienda, Colombia’s third-largest bank, is in cash and is scheduled to be completed in the fourth quarter, HSBC said.

“Central American acquisitions complement the services that Colombian banks provide to Colombian companies,” David Pelaez, an analyst at Bolsa y Renta in Medellin, Colombia said by phone. “The population of Central America, its culture and its economic growth are similar to Colombia’s.”

Banco Davivienda has the funds to acquire HSBC assets in central America, Efrain Forero, the bank’s president, told reporters in Bogota. The bank may seek additional financing, though it wouldn’t be necessary, he said. The bank also plans to offer overseas bonds worth $350 million in the second or third quarter, which would not be used directly to close the transaction, he said.

HSBC, which gains most of its profit in Asia, in December sold its Japanese private-banking business to Credit Suisse Group AG and in July sold almost half its U.S. branches to First Niagara Financial Group Inc. for about $1 billion. It has also sold part of its Russian consumer banking unit.

HSBC is seeking buyers for its non-life insurance assets and may consider selling regional units of the business separately, three people familiar with the matter told Bloomberg News in October. The sale may value the non-life operations at $1 billion to $1.5 billion, they said, asking not to be identified because the sale process is private.

HSBC plans to cut 30,000 jobs and trim as much as $3.5 billion of expenses over the next two years as it tackles wage inflation in faster-growing economies and prepares for stricter capital rules, the bank said in May.

--Editors: Jon Menon, Francis Harris

To contact the reporters on this story: Howard Mustoe in London at hmustoe@bloomberg.net; Blake Schmidt in Bogota at bschmidt16@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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