by Lawrence White
LONDON (Reuters) – HSBC’s plan to sell its French retail banking business to My Money Group, backed by the Cerberus fund, could fail as rising interest rates in France increase the amount capital needed by the buyer after the takeover, the British bank warned on Friday.
An eventual failure would put an end to one of the largest strategic asset disposals carried out by HSBC in recent years as part of its strategy to withdraw from Western markets and refocus on Asia.
The accelerated rise in interest rates has increased the amount of regulatory capital required from the acquirer after the deal closes, HSBC said.
“If this issue is not resolved, the acquirer will not be able to obtain regulatory approval for the transaction,” the bank said.
My Money Group did not immediately respond to a request for comment.
The sale of HSBC’s retail banking in France to My Money Group was announced in June 2021 for a symbolic amount of one euro. The British bank had indicated then that this sale would result in a loss of approximately 2.3 billion dollars.
Given the uncertainty now surrounding the completion of the acquisition, HSBC indicated that it had canceled this accounting entry.
Under the terms of the agreement, My Money Group is required to do everything possible to obtain regulatory approval for the transaction, HSBC said.
But My Money Group warned that was unlikely without changing the terms of the deal, the UK bank continued.
If the transaction goes through, it will likely be delayed, HSBC warned. If it is not finalized by May 31, 2024, the takeover agreement will automatically end – although a delay can be granted until November 30, 2024 under certain conditions.
“HSBC remains committed to pursuing the sale if suitable terms can be found,” the bank said.
(Report Lawrence White; Blandine Hénault for the French version)
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