Strategy
HSBC Mulls Exit From Some Latin America Markets, Impact On Private Banking Unclear
HSBC is in talks over the possible sale of its operations in Colombia, Peru, Uruguay and Paraguay, as the London/Hong Kong-listed banking giant pulls out of what are seen as non-core markets.
HSBC is in talks over the possible sale of its operations in Colombia, Peru, Uruguay and Paraguay, as the London/Hong Kong-listed banking giant pulls out of what are seen as non-core markets.
The statement, issued to the London Stock Exchange, did not elaborate on whether private banking services will be affected, however; as disclosed on its own website, HSBC’s private bank caters to Latin American clients. Several items refer to case studies where the private bank has helped clients in the region.
"HSBC Latin America Holdings (UK), together with other wholly-owned subsidiaries of HSBC Holdings, confirms that it is in discussions regarding the possible sale of its operations in Colombia, Peru, Uruguay and Paraguay. HSBC will make a further announcement if or when appropriate," the statement said.
As part of a streamlining drive to cut costs and focus on the most important markets, chief executive Stuart Gulliver intends to intensify focus on markets such as those of the Asia-Pacific region.
Latin America presence
There are some 70 offices in the four Latin America countries out of nearly 3,600 offices in the Americas, HSBC's website showed. As far as the private bank is concerned, meanwhile, the website said there are 94 offices in 37 countries.
On 8 May, HSBC reported that pre-tax profit for its global private banking segment in the first quarter of 2012 fell by $22 million year-on-year to $286 million, hit by weaker revenues and higher loan impairment charges, partly offset by lower operating costs. In Latin America, private banking accounts for a small slice of the total profit figure: it logged a profit of $5 million in the three months to end-March, compared with $3 million a year earlier.
Across the whole of the HSBC operation in Latin America, it has a relatively low cost/efficiency ratio of 58 per cent.
Even though HSBC intends to intensify its work in the Asia-Pacific region, the bank is also said to be looking to trim some of its exposure to countries there. In April, it was reported that the firm may sell its wealth and retail banking operations in Korea to the Korea Development Bank, part of the KDB Financial Group.
