HSBC Holdings plc announced on 3 August 2015 that it had entered into an agreement to sell its entire business in Brazil, comprising HSBC Bank Brasil S.A – Banco Multiplo and HSBC Servicos e Participacoes Ltda, known collectively as HSBC Brazil, to Banco Bradesco for US$5.2 billion.
HSBC has confirmed that the transaction was unanimously approved on 8 June by Brazil’s competition agency, the Brazilian Administrative Council for Economic Defence, and it is expected to be completed early in July.
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Progress in Implementing HSBC’s Strategy
The sale of HSBC Brazil represents a significant step in HSBC’s stated goal of optimising its global network and reducing complexity. The transaction is expected to decrease group risk weighted assets by around US$37 billion and increase the group’s common equity tier 1 ratio by c.65bps.
The transaction should help Bradesco cut the gap with state-controlled Banco do Brasil SA and Caixa Econômica Federal and private-sector rival Itau Unibanco Holding SA – Brazil’s top three banks by assets. The purchase will give Bradesco control of 13 percent of Brazil’s banking assets,12 percent of total deposits and the nation’s third-largest loan book.
Alexandre Gluher, a senior Bradesco vice president, expects Bradesco to finalise the integration of HSBC’s 851 branches, 5 million clients and over 19,000 employees by October.
The sale marks the latest departure of a foreign lender from one of the world’s most concentrated banking markets. HSBC Chief Executive Officer Stuart Gulliver plans to use proceeds from the sale to boost capital metrics and ensure that the bank remains the biggest dividend payer among European banks.