HSBC Holdings plc HSBC has been contemplating selling its billion-dollar business in Canada. HSBC has reportedly hired bankers to find buyers for its Canadian business as it resists pressure from China insurer Ping An (who is also HSBC’s biggest shareholder) to split the bank in two.
HSBC said in a statement, “We are currently reviewing our strategic options with respect to our wholly owned subsidiary in Canada.”
Per an HSBC spokesperson, the review is at an early stage and no final decision has been taken yet. But, one option would be a sale of the British bank’s 100% stake in HSBC Bank Canada.
HSBC did not comment on the potential valuation of the business. But as of Jun 30, 2022, the bank has assets worth C$125 billion and total equity of C$5.8 billion.
HSBC’s Canada business has been profitable, making C$490 million before tax in the first half of this year.
Thus, it is expected that HSBC would charge any buyer a substantial premium to its current valuation.
Notably, in February 2020, HSBC announced its transformation plan, aimed at reshaping underperforming businesses, simplifying complex organization and reducing costs. As part of this initiative, the company expects to incur $7 billion in charges and achieve at least $5.5 billion of cost savings by 2022-end and an additional $0.5 billion of savings next year. HSBC exited from the U.S. retail banking space this February and announced the divestiture of its French retail banking business.
HSBC has been continuously undertaking measures to bolster its performance, with a special focus on building operations in Asia, including Hong Kong and China. In sync with this, the company acquired 100% of the issued share capital of AXA Insurance in Singapore for $529 million this February and agreed to acquire L&T Investment Management Limited (LTIM) for $425 million.
HSBC intends to be a top bank for high-net-worth and ultra-high-net-worth clients in Asia. In 2020, the company initiated a digital-first, hybrid financial management platform — HSBC Pinnacle — in mainland China to bank on the increasing wealth in the region.
Apart from the above-mentioned efforts, HSBC has started an exclusive fund focused on the metaverse for its private banking clients in Hong Kong and Singapore.
In the past year, shares of HSBC have lost 4.2% compared with the industry’s decline of 12.2%.
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Currently, HSBC sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Divestitures by Other Firms
UBS Group AG UBS agreed to outsource its U.S. alternative investments feeder fund platform, UBS Fund Advisor LLC, to iCapital, a leading global fintech platform driving access and efficiency in alternative investments for the asset and wealth management industries.
UBS’s feeder fund platform, which is referred to as AlphaKeys Funds, represents more than $7 billion in client assets.
UBS financial advisors will continue to serve their high and ultra-high-net-worth clients that hold feeder funds, providing advice and solutions to help meet their unique needs and financial goals.
Citigroup C sold its Philippines Consumer Business to UnionBank of the Philippines. The transaction covers Citigroup’s local credit card, unsecured lending, deposit and investment businesses, as well as Citicorp Financial Services and Insurance Brokerage Philippines Inc., which provides insurance and investment products and services to retail customers.
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