HSBC Continental Europe

Update on Sale of Retail Banking Business in France

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HSBC Continental Europe (‘HBCE’) has today signed a further Memorandum of Understanding regarding certain potential changes to the terms of the sale of its French retail banking business.

 

The following potential changes are designed to enable the Purchaser to satisfy its future capital requirements (following significant interest rate rises since the sale was first agreed in 2021) and to obtain regulatory approval for the transaction:

• the indirect shareholder of My Money Group will contribute €225m of capital to My Money Group by closing;
• HBCE will retain a portfolio of €7.0bn of home loans, which was originally part of the sale (and in respect of which HBCE may consider on-sale opportunities at a suitable time), with HBCE including cash, equivalent to the carrying value of those loans in the transaction perimeter;
• the net asset value of the business to be transferred at closing will be set by reference to the prevailing mortgage interest rate and the 10-year mid-swap rate at the closing date of the transaction (the ‘Prevailing Rates’) capped at €1.720bn;
• depending on the Prevailing Rates, HBCE will receive a profit participation interest of 1.25 times the amount invested (carrying PIK interest of 8% per annum on the outstanding balance) in exchange for investing capital into My Money Group’s top holding company– the maximum amount invested would be €407m, and the aggregate of the actual net asset value delivered at closing and this investment would not exceed €1.768bn;
• a long term agreement for HBCE to license the Crédit Commercial de France (‘CCF’) brand to the Purchaser;
• enhancements for HBCE in respect of insurance and asset management distribution agreements with the Purchaser; and
• operational and servicing arrangements necessary to implement the above arrangements.