Cerberus 'gets 1b euros' in HSBC's French retreat

Business | Staff reporter and agencies 6 May 2021

HSBC (0005) will pay American private equity firm Cerberus more than EUR1 billion (HK$9.33 billion) to take its retail banking network in France off its hands, according to French media reports.

Cerberus will take over 230 retail banks and 4,000 employees of HSBC in France, the reports said.

"In France, as part of our strategic review of our retail banking operations, we are continuing with negotiations in relation to a potential sale, although no decision has yet been taken. If any sale is implemented, given the underlying performance of these operations, a loss on sale is expected," the British lender said in the quarterly earnings release last week.

In March, Reuters reported that HSBC had entered final negotiations to sell its French retail banking business to Cerberus.

The planned disposal is part of HSBC chief executive Noel Quinn's strategy to slash costs across the banking group and Reuters previously reported that Cerberus was among two remaining bidders.

Reuters also reported in February that HSBC is set to withdraw from United States retail banking.

The sale or closure of its around 150 remaining branches in the United States, after it shuttered 80 last year, would mark the end of HSBC's struggle to turn around a business which has struggled to make inroads against incumbent domestic rivals.

HSBC beat quarterly profit forecasts and released US$400 million (HK$3.12 billion) it had set aside to cover bad loans caused by the pandemic, as rapid vaccine rollouts in the United States and Britain raise hopes for an economic recovery.

The UK-based lender reported profit before tax of US$5.78 billion for the three months to March 30, up from US$3.21 billion a year ago and well above analysts' average forecast of US$3.35 billion as compiled by the bank. However, this compared with US$6.21 billion in the same period in 2019, showing the lender has some way to go to get back to pre-pandemic profit levels.

HSBC, which makes the bulk of its profits in Asia, said its credit losses for 2021 were likely to be below the medium-term range of 30-40 basis points it forecast in February. Despite a plan to shift more business to Asia, Quinn said the lender had no immediate plans to move its headquarters from Britain to the region.

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