HSBC announces new terms for sale of French retail business
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HSBC announced new potential terms for the sale of its French retail banking business on Wednesday that might mean the deal with Cerberus-backed My Money Group can go ahead after all.
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The bank warned in April that the sale of the unit might not go ahead as planned due to interest rate increase in France.
It said at the time that My Money had informed it that unexpected rate rises since the terms were agreed in 2021 and the related fair value accounting treatment on acquisition would "significantly" increase the amount of capital it requires at closing of the deal.
"Unless this issue is addressed, the purchaser will be unable to obtain regulatory approval for the transaction," it said.
Although My Money is required "to use its best efforts to obtain this approval", it had advised HSBC that it did not expect to be able to obtain regulatory approval without amending the previously agreed transaction terms.
However, HSBC said on Wednesday that in order to satisfy future capital requirements and to obtain regulatory approval for the deal, the indirect shareholder of My Money Group will contribute €225m of capital.
In addition, HSBC Continental Europe will retain a portfolio of €7.0bn of home loans, which was originally part of the sale.