HSBC to sell assets in South America for $400 million

By Tomas Sarmiento

HSBC Holdings PLCc said on Friday that it had agreed to sell its operations in Colombia, Uruguay, Peru and Paraguay for $400 million in cash to Banco GNB Sudameris.

The Colombia and Peru deals are expected to close in the last quarter of this year and Uruguay and Paraguay should close in the first quarter of 2013, the company said in a statement released in Mexico City.

Banco GNB Sudameris is a financial group controlled by Grupo Gilinski, a family of Colombian bankers with a long record in the industry who had previously tried to buy assets in the region.

As of March, GNB Sudameris’ assets were worth $5.7 billion and ranked No. 10 out of 23 banking groups based on asset worth. The bank was not immediately available for comment on the deal.

HSBC has been quitting smaller markets and businesses to cut costs and streamline operations under new CEO Stuart Gulliver.

The London-based bank operates in 85 countries and Gulliver is trying to sharpen its focus on fast-growing Asian markets. It has struck about 27 deals in the past year to cut more than $60 billion in risk-weighted assets from its balance sheet.

HSBC has 62 branches in the four Latin American countries it is leaving – 24 in Peru, 20 in Colombia, 11 in Uruguay and seven in Paraguay – out of more than 3,000 across the Americas.

As of December 2011, the four operations for sale had assets worth $4.4 billion, HSBC said.

The bank’s Latin American operations made an underlying pretax profit of $2.2 billion last year, up 21 percent. Nevertheless, bad debts have been rising there and costs in the region are high and well above Gulliver’s target.

HSBC this week said first-quarter earnings hit $6.8 billion, beating expectations due to a rebound in investment banking, growth in Asia and a fall in U.S. bad debts.