HSBC is expected to post a loss on the sale of its operations in Argentina for $550 million

Earlier today, HSBC announced that it will sell Grupo Financiero Galicia, a private banking organisation, its Argentina business for $550 million. The bank would lose $1 billion before taxes on this sale.

In a statement to the Hong Kong Stock Exchange, HBSC's Latin American division claimed that it and Galicia had reached a legally binding agreement for the transaction.

According to HSBC, the disposal will result in a $1 billion pre-tax loss in the first quarter of 2024. Additionally, the bank will record at least $4.9 billion in historical cumulative foreign currency translation reserve losses following the transaction's closure.

Furthermore, it is anticipated that the transaction will lower HSBC's CET1 ratio in Q1 by 0.1 percentage points. Nevertheless, the bank stated that its goal for the dividend payment ratio in 2024—50%—remains the same.

The action is a continuation of HSBC's efforts to simplify its operations and concentrate more on its important European and Asian markets. The bank had just finished selling RBC its Canadian business.

In addition, the sale occurred soon after HSBC underwent a significant reorganisation that allowed the bank to generate a profit following years of weak growth.

However, leaving Argentina also coincides with ongoing turmoil in the South American nation, which has long struggled with a sharply weaker currency, rising public debt, and bouts of political instability.

(Sources: investing.com, reuters.com)