HSBC eyes sale of multibillion-dollar Canadian business

LONDON, Oct 4 (Reuters) – HSBC is considering selling its billions-of-dollar business in Canada, which is one of the country’s biggest international banking brands, in a bid to boost returns as demanded by its largest shareholder.

“We are currently reviewing our strategic options with respect to our wholly owned subsidiary in Canada,” the bank said in an emailed statement on Tuesday.

HSBC declined to comment on the company’s possible valuation, but it had assets of CA$125 billion (US$92 billion) and total capital of CA$5.8 billion as of June 30, according to its latest financial results.

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The business, unlike some others that HSBC has been trying to divest in recent years, is profitable and brought in CA$490 million before tax in the first half of this year.

That means the lender would hope to charge each buyer a significant premium over their current valuation.

The review is still in its early stages, the spokesman said, and no final decision has been made, but one option would be to sell the lender’s 100 percent stake in HSBC Bank Canada.

The sale would be the latest in a series of divestitures at HSBC, which once billed itself as the “local bank of the world”.

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HSBC announced in May last year that it was exiting mass-market banking in the United States, and in June announced it would divest its French retail business as part of a plan to boost profits and fend off calls from top Chinese shareholder Ping An Insurance Group to sell its Asian spin-off.

If the review of HSBC in Canada resulted in a 100% sale of its unit there, it would be a more complete exit from the country than these other divestitures.

HSBC Bank Canada comprises four divisions covering HSBC’s commercial banking, retail banking, investment banking and market services businesses in the country.

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According to Refinitiv, the bank is the seventh largest in the country by assets and the largest international player in a market dominated by domestic incumbent banks.

Ping An launched a campaign in April to pressure the British bank to explore options, including listing its Asia operations, to boost shareholder returns. Ping An said it is not an activist investor.

News of HSBC’s review of its Canadian operations was first reported by Sky.

($1 = 1.3644 Canadian Dollars)

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Reporting by Lawrence White Editing by Sinead Cruise and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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