HSBC completes sale of Brazilian operations

HSBC confirmed the completion of the sale of its Brazil business on Monday, after announcing on 8 June that it had received all necessary regulatory approvals for the transaction.

The FTSE 100 bank had put HSBC Brazil on the market as part of its efforts to streamline the global business, accepting an offer from Banco Bradesco.

“The sale of HSBC Brazil represents a significant step in HSBC's stated goal to optimise its global network and reduce complexity,” the board said in the announcement.

“Based at 31 March 2016, the transaction was expected to decrease group risk-weighted assets by around $37bn and increase the group's common equity tier 1 ratio by around 65bps.

“As previously announced, HSBC has maintained a presence in Brazil to serve large corporate clients with respect to their international needs.”

HSBC previously confirmed the deal was worth $5.2bn in an all-cash transaction.

On Monday it said that, based on the net assets of HSBC Brazil including allocated goodwill at 31 March of $4.3bn, the transaction would have generated a gain on sale of $0.6bn before the recycling of foreign exchange losses previously recognised in other comprehensive income.

After the recycling of foreign exchange losses, there would have been an accounting loss on sale of $1.7bn.

“Neither the allocated goodwill nor the recycling of foreign exchange losses impact the regulatory capital that will be generated from the disposal at group level,” the board said.

“The purchase price and impact of sale will be further adjusted for the change in net asset value for the period up until the completion date of 1 July 2016.”