HSBC Holdings Plc has tweaked the terms of a deal to sell its French retail banking business to Cerberus’s My Money Bank, which had cooled on the takeover that was proposed two years earlier due to the rapid rise in interest rates.
(Bloomberg) — HSBC Holdings Plc has tweaked the terms of a deal to sell its French retail banking business to Cerberus’s My Money Bank, which had cooled on the takeover that was proposed two years earlier due to the rapid rise in interest rates.
The London-headquartered bank will now retain a €7 billion ($7.6 billion) portfolio of home loans it had originally expected to sell to My Money Bank, while Cerberus will inject €225 million of additional capital into the business, according to a statement Wednesday. The French business had a total loan book of €23.4 billion at the end of last year.
In April, the firm surprised investors when it said the sale, which was agreed upon in 2021, was in doubt due to “significant, unexpected interest rate rises in France.” At the time, the bank reversed a previously recognized $2 billion impairment, boosting its CET1 ratio, a key measure of financial strength, by about 25 basis points.
On Wednesday, HSBC said the refreshed deal would lead to a new pretax loss of as much as $2.7 billion, with as much as $2.2 billion recognized in its first half results. The deal is now expected to close on January 1. Two years ago, the bank said it expected the losses to be about $2.3 billion, plus $700 million of goodwill charges.
“The changes do not alter the underlying rationale for the transaction, which will allow HSBC Continental Europe to focus on its international wholesale business model,” said HSBC in a statement. “There is no immediate change to the accounting treatment of the French retail business — there will be an information and consultation process with respective works councils and the transaction remains subject to regulatory approvals.”
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.