HSBC Holdings Plc Agrees to Sell It’s Brazil unit to Bradesco for $5.2 Billion
On Monday, in a statement HSBC Holdings Plc said that it is selling its unprofitable Brazilian unit in a deal worth $5.2 billion to Banco Bradesco SA. The unit has given unsatisfactory performance for years.
However the sale of HSBC Bank Brasil SA Banco Multiplo and the HSBC Serviços e Participaçoes Ltda units still has to get regulatory approval. The deal was sealed on July 31 and is expected to be completed by coming June.
HSBC started its venture in Brazil in the late 1990s but could never grow big enough in size to compete with the top lenders of the country which include Itau, Bradesco or Banco do Brasil. HSBC Brasil employs 21,000 people and has 854 branches. Its assets are worth approximately 170 billion reais. That represents around 2.3 percent of the banking system assets of Brazil.
HSBC's unit faced a problem due to strategy missteps and the growing competition. In June, Stuart Gulliver, HSBC's Chief Executive Officer chalked out a plan to trim almost one out of five jobs worldwide and make operations better. Just like Brazil other operations globally were struggling with problems like high compliance costs, operational underperformance and massive competition.
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