HSBC says Goodbye Argentina

HSBC’s decision to sell off its business in Argentina for $550 million (€506.9 million) will cost it $1 billion (€921.7 million).

HSBC Argentina, with more than 100 branches and 3,100 employees, is to be bought by Grupo Financiero Galicia, a major private financial group.

Currently Argentina’s fifth-largest bank, it will become the country’s second most-important after Banco Nacion once the deal goes through.

London-based HSBC, the largest in Europe, has been battling Argentina’s unstable exchange rate for years after disembarking in 1997 on taking over and renaming Banco Roberts.

In 2019, $1 (€0.92) was worth 43 pesos but now costs more than 860 pesos, while March 2024’s annual inflation rate of 276.2 per cent was the highest in the world.

The bank has gradually sold off other global operations as it concentrates on Asia’s rapidly-expanding markets and is preparing for a $1 billion loss in 2024’s first quarter owing to the HSBC Argentina sale.

The exact size of the loss would depend on “several reasons” which include associated hyperinflation and foreign currency translation, HSBC said on April 9.  It also expects to lose a further $4.9 billion (€4.5 billion) over the year, after incorporating Argentina’s financial performance, calculated in pesos, onto HSBC’s general balance in US dollars.

“These reserve losses have accumulated over many years,” the bank said, revealing that in 2023 alone these grew by $1.8 billion (€1.66 billion).

The exact losses could easily change between now and when the sale is completed, because the exchange rate is constantly changing, sources added.