HSBC says sale of French retail banking arm could fall through

14th Apr 2023 13:08

(Sharecast News) - HSBC cautioned on Friday that the sale of its French retail banking arm to Cerberus-backed My Money Group may not go ahead as planned due to interest rate increases in France.

HSBC said My Money had informed the bank that unexpected rate rises since the terms were agreed in 2021 and the related fair value accounting treatment on acquisition will "significantly" increase the amount of capital it requires at closing of the deal.

"Unless this issue is addressed, the purchaser will be unable to obtain regulatory approval for the transaction," it said.

Although My Money is required "to use its best efforts to obtain this approval", it has advised HSBC that it does not expect to be able to obtain regulatory approval without amending the previously agreed transaction terms.

HSBC said discussions between the parties are continuing and that if the deal does go ahead, it's expected that closing will be delayed.

HSBC agreed to sell the French unit for a nominal €1 and said at the time that it was expecting to incur a $2.3bn loss on the disposal.

"HSBC remains committed to pursuing the sale providing appropriate terms can be agreed and to supporting our clients and colleagues in France at all times," it said.