HSBC said the sale of its French retail business is on the verge of collapse as the purchaser, My Money Group, is struggling to raise the additional capital required following recent rate hikes.
“Significant interest rate rises since the sale terms were agreed and the related fair value accounting treatment on acquisition have made completion by the Purchaser Group less certain,” the UK bank said in a statement.
HSBC announced the sale of its French arm to My Money, owned by private equity group Cerebrus, in June 2021 and was prepared to book almost US$3bn of losses and impairments to get the deal through.
Completion was expected in the first half of 2023, but HSBC said it has now been informed by the purchaser group that due to the rise in interest rates and the accounting treatment necessary, “significantly” more capital is needed to get regulatory approval.
As a consequence, HSBC’ is no longer classifying its French business as for sale and US$2bn of impairments already taken will be written back, amove that will boost its key financial security ratio ( CET1) by 0.25%.
HSBC added it is still committed to the sale if terms can be agreed, with the deal having a final deadline date of 31 May 2024.
If the sale does not happen there would be no material impact on the guidance or performance of HSBC, said its statement.
Shares rose 3.2% to 585.3p.