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HSBC in Final Talks to Sell French Retail Unit to Cerberus

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Zacks Equity Research
·3 min read
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HSBC Holdings HSBC has entered into final talks to sell its unprofitable French retail bank to the U.S.-based private equity firm, Cerberus Capital Management. The deal is part of the company’s efforts to reorganize global operations and improve efficiency.

HSBC has been working with Lazard LAZ to find a prospective buyer for its 270 branches in France.

Per the Wall Street Journal, in an internal memo, Jean Beunardeau, head of HSBC’s Continental European operations, informed employees that the proposed deal will include only the retail banking business and wealth management operations. However, insurance and asset management businesses are not part of the same.

HSBC may continue offering insurance and asset-management products through its French bank following the divestiture.

Further, Beunardeau noted that Cerberus intends to integrate HSBC France with My Money Group, a French lender it acquired from General Electric GE in April 2017. He also stated “Discussions are still ongoing and are expected to be for some weeks to come, and these may or may not lead to a transaction.”

In September 2020, Reuters had reported that HSBC wasn’t able to garner sufficient interest for the unit and might have to incur losses on sale. Cerberus was one of the remaining two bidders of HSBC France.

Notably, the sale is part of HSBC’s plan to scale back operations in Europe and North America, and focus more on the profitable Asia region, where the company is likely to face competition from Credit Suisse Group and UBS Group AG UBS. The company is also mulling sell of its unprofitable U.S. retail banking business.

All these initiatives are part of HSBC’s transformation plan that was announced in February 2020. This is aimed at reshaping underperforming businesses, simplifying complex organization and reducing costs.

Shares of HSBC have gained 17.4% so far this year, outperforming the industry’s growth of 12.2%.

Currently, HSBC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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