HSBC ready to pick buyer for US$4 billion Brazil arm in June: sources

HSBC Holdings Plc will probably select a preferred bidder for its unprofitable Brazilian unit as early as mid-June in a sale that may raise about US$4 billion, said two people with knowledge of the plan. 

PHOTO: REUTERS

MAY 13, 20157:21 AM

[LONDON/SAO PAULO] HSBC Holdings Plc will probably select a preferred bidder for its unprofitable Brazilian unit as early as mid-June in a sale that may raise about US$4 billion, said two people with knowledge of the plan.

Banks interested in the operation include Brazil's Banco Bradesco SA and Grupo BTG Pactual, Spain's Banco Santander SA and Bank of Nova Scotia from Canada, said the people, who asked not to be identified because the details are private.

Industrial & Commercial Bank of China and China Construction Bank Corp are also assessing the deal, one person said. The sales document was sent to bidders about two weeks ago, according to the people.

HSBC Chief Executive Officer Stuart Gulliver, 56, has cited Brazil, Mexico, Turkey and the US as potential markets to exit as he seeks ways to cut costs and shore up earnings. Europe's largest bank has sold or closed about 77 businesses since 2011, with regulators increasing scrutiny of balance sheets and demanding higher capital buffers against risky assets.

"Decisive steps to exit non-marginal markets would be very well received by the market," Jason Napier, an analyst at Deutsche Bank AG, said in a note on May 5. The Brazilian unit may be valued between US$3.5 billion and US$4.6 billion, according Tito Labarta, an analyst at Deutsche Bank.

Goldman Sachs Group Inc is managing the sale, the people said.

Officials at HSBC, Goldman Sachs, Santander, Bank of Nova Scotia, Bradesco and ICBC declined to comment.

A Beijing-based press officer at Construction Bank said it is still in the process of completing its purchase of Brazilian lender Banco Industrial e Comercial SA and is not aware of any other potential acquisition in the region.

"We have the obligation to look at it, because it is a very important transaction for the Brazilian financial system, but honestly, we are very happy with the platform we have," said Joao Dantas, head of investor relations for BTG. "We have about 3,500 employees and HSBC has more than 20,000 workers and the retail business is not our priority."

Scotiabank CEO Brian Porter told reporters in April that he wouldn't rule out acquisitions in Brazil in the longer term, calling it an "exciting" and "attractive market." "The bank has a history of being acquisitive and that could be anywhere within our footprint," he said at the time.

HSBC's Brazil unit is the seventh-largest bank in the country, according to Deutsche Bank's Labarta. It has some 853 branches, assets of 145.7 billion reais (US$48 billion) and posted a loss of 441 million reais in 2014, according to its annual report.

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