It assumes a negative impact of 922 million in the first quarter and historical losses in reserves appear due to the devaluation of the peso


HSBC Latin America, a subsidiary of HSBC Holdings, has signed a binding agreement to sell to Grupo Financiero Galicia its entire business in Argentina, which covers banking, asset management and insurance, along with 100 million dollars (92 million euros) of debt subordinated company, for an amount of approximately 550 million dollars (507 million euros), subject to adjustments based on business results.

In a statement, HSBC has explained that it expects to receive the purchase consideration in a combination of cash, loan notes and American depositary receipts (ADR) from Galicia, Argentina’s largest private financial group.

The British entity estimates that it will assume an adverse pre-tax impact of $1 billion (€922 million) following the reclassification of the business as held for sale in the first quarter of 2024.

Additionally, the transaction will lead HSBC to the recognition of approximately $4.9 billion (€4.519 million) in historical foreign currency translation reserve losses that have accumulated over years and arise from the cumulative conversion of the book value denominated in Argentine pesos. from HSBC Argentina to US dollars.

In this sense, during 2023, as a result of the devaluation in Argentina, reserve losses due to foreign currency conversion grew by 1,800 million dollars (1,660 million euros) and have already been recognized in capital, so their recognition in the income statement will have no impact on the CET1 or the tangible net asset value.

“This transaction is another important step in the execution of our strategy and allows us to focus our resources on higher value opportunities across our international network,” said Noel Quinn, CEO of HSBC.

“We remain committed to Mexico and the United States, and to serving our international clients through our global network with our leading transaction banking capabilities,” he added.