HSBC Latin America BV, a wholly-owned subsidiary of HSBC Holdings, has signed a binding agreement with Buenos Aires-based Grupo Financiero Galicia to sell its business in Argentina.
The agreement involves the acquisition of all of HSBC Argentina's business, which includes banking, asset management, and insurance. The deal also encompasses $100 million of subordinated debt issued by HSBC Argentina and held by other HSBC entities.
The consideration for the acquisition amounts to $550 million, which will be adjusted for the results of the business and fair value gains or losses on HSBC Argentina's securities portfolios during the period between December 31, 2023 and closing.
HSBC expects to receive the purchase consideration in a combination of cash, loan notes, and Galicia's American Depositary Receipts (ADRs), with ADRs accounting for around half of the consideration received and representing less than a 10% economic interest in Galicia.
The transaction is subject to conditions, including regulatory approvals, and is expected to be completed within the next 12 months.
Further, the company stated that the transaction will be treated as a material notable item.
The HSBC Group's dividend payout ratio target remains at 50% for 2024, excluding material notable items and related impacts.