HSBC Holdings PLC
expects to take $3 billion in losses as part of an agreement to sell its unprofitable French retail bank, in a sign of the souring fortunes of European banking.
London-based HSBC, one of the world’s largest lenders, said Friday that it had agreed to sell the bank to a company owned by Cerberus Capital Management LP, a New York-based private-equity firm.
HSBC said it would receive 1 euro for the bank, equivalent to around $1.19, and that it might be required to put additional cash into the deal, which isn’t expected to close until the first half of 2023. It expects to take a pretax loss of $2.3 billion on the sale, plus a further $700 million goodwill write-down.
Two decades ago, HSBC paid $10.6 billion to acquire Credit Commercial de France, as part of a broad growth strategy to expand its footprint to economies large and small around the world.
Its sale reflects the dire straits of European banks, with slow growth, negative interest rates and regulatory and political obstacles to consolidation.
“It is not expected that the potential transaction will result in any net proceeds of sale for the HSBC Group,” HSBC said.
In 2000, when it bought Credit Commercial de France, the total value of takeovers of European banks was over $90 billion, according to Dealogic. Last year, the value of European banking takeovers slumped to under $50 billion.
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