By Lawrence White
LONDON (Reuters) -HSBC on Wednesday announced new potential terms that might pave the way for a strategically-important sale of its French retail banking business after the transaction stalled earlier this year on regulatory capital concerns.
HSBC said the indirect shareholder of Cerberus-backed My Money Group, which is buying HSBC’s French retail bank, will contribute 225 million euros ($244.22 million)of capital, in a bid to quell regulatory worries about the capital levels of the combined new entity.
HSBC will also retain a portfolio of home loans worth around 7 billion euros, originally earmarked as part of the deal and which it said it might still look to sell at a later date.
The revised terms of the deal partly reflect the fact that interest rates have risen since the two parties originally signed the agreement in June 2021, making the French retail banking business more attractive.
As part of the deal HSBC will now also receive a profit participation interest of 1.25 times the amount invested, in exchange for investing up to 407 million euros of capital into My Money Group’s top holding company.
HSBC has also negotiated a long term agreement to license the Crédit Commercial de France (CCF) brand to the buyer.
The disposal is part of a wider effort by Europe’s biggest bank to shrink or exit markets where it is underperforming and refocus on Asia.
The lender is considering exiting as many as a dozen countries, Reuters reported last month.
($1 = 0.9213 euros)
(Reporting By Lawrence White, editing by Sinead Cruise)
