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HSBC reaches revised terms for sale of its French retail banking business
- HSBC to retain US$7.6 billion in loans as part of revised transaction; expects to take pre-tax loss of up to US$2.7 billion on sale
- Lender warned in April that completion of transaction was ‘less certain’ following interest rate increases
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Chad Brayin London
HSBC has reached revised terms to sell its French retail business to Cerberus Capital Management-backed My Money Group after the lender said earlier this year that a sharp rise in interest rates in France had made the deal “less certain”.
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The revised terms will see HSBC’s European business, in part, retain a portfolio of €7 billion (US$7.6 billion) in home and other loans originally expected to be transferred as part of the transaction. Those loans will be serviced by My Money Group post-closing and HSBC can pursue sale opportunities at an appropriate time.
HSBC is expected take an estimated pre-tax loss of as much as US$2.7 billion on the transaction, with a pre-tax loss of US$2.2 billion expected to be recognised in the second half of this year when the business is reclassified as held for sale. The final loss will be determined by prevailing interest rates.
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“The board of directors of HSBC Holdings believes the terms of the transaction (as varied by the potential changes) remain fair and reasonable and in the interests of shareholders as a whole,” the London-based bank said in a stock exchange filing.
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