HSBC is in advance stage of talks to sell its French retail business to American private equity firm Cerberus Capital Management and another unnamed investor, Reuters reported.
Cerberus, which is also the biggest private-sector shareholder in German lender Commerzbank, has told HSBC that it intends to buy the French business for a symbolic price of €1.
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However, this is subject to the British lender injecting over €500m ($582.70m) into the business, the report added.
HSBC is working with Lazard to sell as many as 270 retail branches in France. The move is in line with HSBC CEO Noel Quinn’s strategy to cut costs.
HSBC’s French business is short on bids and Cerberus and the other investor are the only bidders left in the fray.
Earlier, many French banks studied the dossier but they all walked away, the report added citing three sources.
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By GlobalDataOnce the business is fully recapitalised, Cerberus and the other investor will take over.
One of the sources said: “The price is going to be disastrous for HSBC.”
A deal is anticipated to take place by the end of this year, subject to the receipt of regulatory approvals as well as the impact of heavy job cuts at the bank.
If the deal falls apart, it will be a significant hit to HSBC’s restructuring plans, which includes completion of recent asset disposals for improving returns.
In its first-half results, HSBC France’s private banking and wealth management business posted an adjusted loss-before-tax of €225m.
The report comes close on the heels of China-based Ping An Insurance Group buying an additional $39.4m worth stake in HSBC during the stock sell-off.
Earlier this month, HSBC cut 26 general banking fees for its retail banking customers in Hong Kong as virtual banks disrupt the banking industry amid the Covid-19 pandemic.
Last month, HSBC launched a digital application experience for its new and existing international customers.
