HSBC Arm Strikes Deal to Divest French Retail Unit; Expects to Incur Loss


Paris-based banking subsidiary of HSBC Holdings (HSBC), HSBC Continental Europe (HBCE) has entered a deal with My Money Group to divest its retail banking business in France.

Following the announcement, shares of HSBC stock plunged about 3.3% in Friday’s trading session. The divestment disappointed investors as HSBC has alluded to a pre-tax loss of €1.9 billion as a result of the sale.

The divestiture includes 244 branches, more than 800,000 customers, €21.5 billion in customer loans, and €8.9 billion in deposit balances. Notably, the transaction is expected to be completed in the first half of 2023. (See HSBC stock chart on TipRanks)

Jean Beunardeau, HBCE CEO commented, “This potential transaction is an important step towards achieving our strategic goal of being a leading wholesale bank in Continental Europe for Corporate and Investment Banking, Markets and Private Banking, anchored in Paris, connecting our customers to HSBC’s global network, and providing access to Continental Europe for HSBC’s customers around the world.”

In April, CFRA analyst Firdaus Ibrahim reiterated a Buy rating on HSBC stock with a price target of $38. The analyst’s price target implies 28.6% upside potential.

Ibrahim is of the opinion that the company’s strategy to grow its Asia operations and focus on making wealth management businesses more profitable highlights its growth potential and separates it from other players in the market. HSBC had provided a strategy update in February 2020.

Consensus among analysts is a Moderate Buy based on 2 Buys. The average HSBC analyst price target is $38.

According to TipRanks’ Smart Score system, HSBC gets a 6 out of 10, which indicates that the stock is likely to perform in line with market averages.

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