By: 19 April 2024

The deal, which is expected to be finalised within the next 12 months, will see Grupo Financiero Galicia acquire all aspects of HSBC Argentina’s operations

HSBC to sell Argentinian banking arm for $550m

Global banking heavyweight HSBC has entered into an agreement to sell its banking operations in Argentina to Grupo Financiero Galicia for $550m.

Galicia will acquire all aspects of HSBC Argentina’s operations, including asset management, insurance, and banking. Furthermore, Galicia will take on $100 million of subordinated debt issued by HSBC Argentina and held by other HSBC entities.

HSBC states that the sale will result in a pre-tax loss of $1bn, to be reflected in Q1 of 2024.

Based in Buenos Aires, Grupo Financiero Galicia is a financial services holding company. Through its subsidiaries, including Banco Galicia, it provides services including savings, credit, and insurance, among others.

Speaking on the deal, HSBC’s chief executive Noel Quinn said: “This transaction is another important step in the execution of our strategy and enables us to focus our resources on higher value opportunities across our international network.

“HSBC Argentina is largely a domestically focused business, with limited connectivity to the rest of our international network. Furthermore, given its size, it also generates substantial earnings volatility for the Group when its results are translated into US dollars. Galicia is better placed to invest in and grow the business.”

Quinn also said that HSBC is still “committed to Mexico and the US, and to serving our international clients throughout our global network”.

The financial sector is Argentinas is in a spot of turmoil currently. Annual inflation hit 276.2% last month, the highest in the world. Five years ago, $1 would buy 43 pesos. It is now worth more than 860 pesos.

Fabian Kon, Grupo Financiero Galicia chief executive officer, said: “Argentina is a country that has been historically undisciplined, so it needs fiscal discipline and with fiscal discipline, inflation is a mathematical impossibility. We see a downward path for inflation.

“The freedom of the markets helps investments. What we are looking for is growth in an increasingly competitive environment where a bank’s investment is basically technology.”

The news comes just a few months after HSBC launched its own international payments app, Zing. Initially launching in the UK, the app will eventually expand to other markets across the world.

Image: HSBC

Robert Welbourn
Robert Welbourn is an experienced financial writer. He has worked for a number of high street banks and trading platforms. He's also a published author and freelance writer and editor.