According to foreign media reports, HSBC is cooperating with JPMorgan Chase in a transaction, which also means that HSBC will further reduce its business in North America. "The sale will be a huge deal for HSBC, both financially and symbolically," said a source.
It is reported that the valuation of the sale business may be between $8 billion and $9 billion. According to the financial report of HSBC 20021,the profit of Canadian business accounts for 4. 1% of the pre-tax profit of HSBC's global business.
Proposed sale of Canadian business
According to the Financial Times, HSBC is exploring selling its Canadian business for about 9 billion US dollars (equivalent to about 64 billion yuan). HSBC, headquartered in London, England, seems to be under pressure from major shareholders to focus on business exploration in Asia.
It is understood that the potential valuation of HSBC Canada Branch is between $8 billion and $9 billion.
The London-based financial group recently said that the decision is in the early stage of review because it wants to reshape its global network to focus on Asia and other growth regions.
According to Sky News, HSBC is working with bankers in JPMorgan Chase to find potential buyers. According to the financial report, HSBC Canada made a pre-tax profit of 952 million Canadian dollars in 20021year.
"HSBC regularly reviews its business in all markets. The strategic choice of its wholly-owned subsidiary in Canada is currently under review. " People close to HSBC said.
Reshaping the global network
Although HSBC is headquartered in Britain, about two-thirds of its profits come from Asia. The review and evaluation of Canada business comes at a time when HSBC is seeking to cut costs and reduce its less profitable overseas business, with a view to focusing on Asia and Europe.
The bank, which operates in more than 60 countries, is also seeking to simplify its global network.
Last year, HSBC sold its French business to Cerberus, a private equity firm, divesting 244 branches and 800,000 customers. In addition, as early as 20 16, HSBC sold its business in Brazil to BancoBradesco for $5.2 billion.
In the semi-annual results released in August, HSBC reported that it achieved a return on equity of about 9.9%, but the new goal is to reach at least 12% from next year.
Who will eventually spend it?
Reuters recently reported that as HSBC explored the possibility of selling its Canadian unit, lawyers and analysts said that the country's centralized banking market may prevent large domestic banks from bidding because the government has asked antitrust regulators to promote more competition.
According to Reuters's calculation, this transaction of HSBC will be the first large-scale sale of banking business in Canada in a decade, and Canada is one of the most concentrated markets for banks in the world. The top six banks in China control about 80% of the total assets, about twice as much as the top five banks in the United States control 40%.
Analysts said that the bidder who is most likely to have the least dealings with antitrust regulators is a small Canadian bank. Selling to banks outside Canada will not have antitrust problems, but it may "fail" because of national security concerns.
It says it is easy to think that the federal government will conduct a very in-depth investigation to assess the potential security and public interests.
Edward Jones, a senior stock analyst, said that the range of potential buyers may have been very small, because some large Canadian lenders, including TD. TO) and the Bank of Montreal (BMO). TO), are buying American assets.
"It seems that no bank in Canada can be a candidate for this transaction." The analyst said that at present, due to capital adequacy ratio and other requirements, banks from the United States have failed to expand in Canada, thus excluding any bids from American banks.
NatioNAl bank of Canada (na. TO) said that the regulatory barriers of Royal Bank of Canada (RBC) will be higher than other banks in Canada. However, Royal Bank of Canada declined to comment. According to a research report, HSBC's footprint in western Canada may immediately bring diversification to the Montreal-based National Bank of Canada.
Want to know more financial news in real time, please pay attention to us.