HSBC Continental Europe

Update on Sale of Retail Banking Business in France - Seite 2

The changes do not alter the underlying rationale for the transaction, which will allow HBCE to focus on its international wholesale business model. There is no immediate change to the IFRS accounting treatment of the French retail business – there will be an information and consultation process with respective works councils and the transaction remains subject to regulatory approvals. The parties are aiming to close the Transaction on 1 January 2024.

 

The financial impact of the Transaction for HBCE is now expected to be:

• A cumulative pre-tax loss on sale up to €2.2bn, including an estimated up to €2.0bn, expected to be recognised during 2H23. The final pre-tax loss on sale will be determined at closing, by reference to Prevailing Rates at the time and the value of the profit participation interest (if relevant).
• An estimated reduction of €2.5bn in RWAs.
• Ongoing costs associated with the retention of €7.0bn of home loans, net of income on distribution agreements and brand licensing, for an estimated after-tax loss of €0.1bn for 2024.
• CET1 broadly unchanged from 31DEC22 (15.3%) upon reclassification of the business as held for sale under IFRS as the reversal of the previously recognised loss had not been verified for inclusion in the CET1 at 31MAR23.

 

On 18 June 2021, HSBC Continental Europe (‘HBCE’) announced (the ‘2021 Announcement’) that it had signed a Memorandum of Understanding with Promontoria MMB SAS (‘My Money Group’) and its subsidiary Banque des Caraïbes SA (the ‘Purchaser’, and together with My Money Group, the ‘Purchaser Group’) regarding the potential sale of HBCE’s retail banking business in France (the ‘Business’) (the ‘Transaction’). The parties subsequently entered into a binding framework agreement (‘Framework Agreement’) on 25 November 2021. My Money Group and the Purchaser are under the control, directly or indirectly, of funds and accounts managed or advised by Cerberus Capital Management L.P.

On 14 April 2023, HBCE announced that following significant interest rate rises since the sale terms were agreed in 2021, completion of the Transaction was less certain and that the Business was no longer being classified as held for sale.

The parties have today signed a further Memorandum of Understanding (‘MoU’) regarding certain potential changes to the terms of the Transaction (the ‘Potential Changes’) which are designed to enable the Purchaser to satisfy its future capital requirements and to obtain regulatory approval for the Transaction. The Potential Changes do not alter the underlying rationale for the Transaction as set out in the 2021 Announcement.