HSBC in talks to sell local operations
Transaction size expected to be around Rs6.0b to Rs7.5b: analyst.
KARACHI:
Europe’s biggest bank, HSBC, is in talks to sell its Pakistan business, the latest effort by the group to slim its global presence.
HSBC said it was in talks with several unnamed companies to sell its Pakistan business, it said in a separate statement.
The bank said in a statement that the process was contingent on regulatory approval. It wouldn’t comment on the value of the branches in Pakistan, where it has been since 1982, has amassed 30,000 customers and employs 394 people.
“HSBC could potentially be acquired for transaction size of Rs6.0 billion to Rs7.5 billion ($67 million-$83 milllion,” according to AKD Securities research note. The lower-end of this range would likely generate a bargain purchase gain, adds the note.
“While it has a relatively small branch network of around 10, acquirers are likely interested in the bank’s systems, employees, fee income franchise and treasury operations alongside the prestige factor.
News reports indicate that several local players including MCB Bank, United Bank and KASB Finance are interested in acquiring HSBC Pakistan operations while we do not rule out new entrants taking an interest, adds the note.
If completed, the deals would take the number carried out by HSBC Chief Executive Stuart Gulliver since taking over early last year to 25, as he tries to revive his bank by cutting costs and boosting profitability. Deals already struck will cut $50 billion in risk-weighted assets from its balance sheet since early 2011.
The London-based bank operates in 85 countries and Gulliver is trying to sharpen its focus on fast-growing Asian markets, while businesses that lack scale in Asia could also be on the block.
It made a $22 billion profit last year, the largest by a western bank, but costs continue to rise and its return on equity was 10.9%, short of its 12-15% target.
HSBC has this year sold its general insurance businesses for $914 million, sold operations in Costa Rica, El Salvador and Honduras for around $800 million, and said it would quit Slovakia. It is also considering selling some Mauritius units.
In recent months, the sale of businesses has gathered momentum. On Monday, HSBC signed a memorandum of understanding with Korea Development Bank for the lender to buy its Korean retail operations. With additional reporting by Reuters
Published in The Express Tribune, April 11th, 2012.
Europe’s biggest bank, HSBC, is in talks to sell its Pakistan business, the latest effort by the group to slim its global presence.
HSBC said it was in talks with several unnamed companies to sell its Pakistan business, it said in a separate statement.
The bank said in a statement that the process was contingent on regulatory approval. It wouldn’t comment on the value of the branches in Pakistan, where it has been since 1982, has amassed 30,000 customers and employs 394 people.
“HSBC could potentially be acquired for transaction size of Rs6.0 billion to Rs7.5 billion ($67 million-$83 milllion,” according to AKD Securities research note. The lower-end of this range would likely generate a bargain purchase gain, adds the note.
“While it has a relatively small branch network of around 10, acquirers are likely interested in the bank’s systems, employees, fee income franchise and treasury operations alongside the prestige factor.
News reports indicate that several local players including MCB Bank, United Bank and KASB Finance are interested in acquiring HSBC Pakistan operations while we do not rule out new entrants taking an interest, adds the note.
If completed, the deals would take the number carried out by HSBC Chief Executive Stuart Gulliver since taking over early last year to 25, as he tries to revive his bank by cutting costs and boosting profitability. Deals already struck will cut $50 billion in risk-weighted assets from its balance sheet since early 2011.
The London-based bank operates in 85 countries and Gulliver is trying to sharpen its focus on fast-growing Asian markets, while businesses that lack scale in Asia could also be on the block.
It made a $22 billion profit last year, the largest by a western bank, but costs continue to rise and its return on equity was 10.9%, short of its 12-15% target.
HSBC has this year sold its general insurance businesses for $914 million, sold operations in Costa Rica, El Salvador and Honduras for around $800 million, and said it would quit Slovakia. It is also considering selling some Mauritius units.
In recent months, the sale of businesses has gathered momentum. On Monday, HSBC signed a memorandum of understanding with Korea Development Bank for the lender to buy its Korean retail operations. With additional reporting by Reuters
Published in The Express Tribune, April 11th, 2012.