HSBC has agreed to sell its French retail bank to Cerberus-backed My Money Group, furthering the British lender’s non-Asia retreat.
HSBC has agreed to sell its French retail bank to the Paris-based banking group in a deal that includes 244 branches, 3,900 staff alongside 21.5 billion euros ($25.5 billion) in customer loans and 18.9 billion euros in deposits, according to a statement.
If agreed by employees of both firms, as per French law, the deal could be signed off by the second half of this year and completed by 2023.
According to HSBC, the sale prices will be a nominal 1 euro which will result in a loss of around $2.3 billion. At the time of deal completion, the bank expects net asset value to total $2 billion and it agrees to make up any shortfall should that valuation decline.
The signing of an [memorandum of understanding] for the potential sale of our French retail banking business represents a significant step in progressing the actions we announced during our strategic update earlier this year, said HSBC group chief executive Noel Quinn.
It will enable us to dramatically simplify our business in Continental Europe and allow us to accelerate the transformation of our European wholesale banking franchise.
According to My Money CEO Eric Shehadeh, the firm aims for the newly acquired bank to return to profitability three years after taking control with commitments not to cut jobs until 2024 or 2025.
The acquisition, if successful, will further add to U.S. private equity firm Cerberus’ portfolio of European banking stakes which includes ownership at Deutsche Bank and Commerzbank.