HSBC has initiated a strategic review of its Canadian subsidiary, which includes a possible sale for up to $9bn amid pressure from its largest shareholder Ping An to separate its Asian and western operations.
The UK-based banking group stated that the review is in early stages as it plans to rejig its global network with an aim to concentrate on Asia and other growth regions, reported The Financial Times.
The sale may value the subsidiary in the range of $8bn-$9bn, wrote the publication, citing a person having knowledge of the matter.
Sky News first reported that HSBC has engaged JP Morgan’s bankers to pursue potential buyers for HSBC Canada.
Replying to a query from the publication, the banking company stated: “HSBC regularly reviews its businesses in all its markets. We are currently reviewing our strategic options with respect to our wholly owned subsidiary in Canada.
“Amongst the options being explored is a potential sale of HSBC Group’s 100 per cent equity stake in HSBC Bank Canada. HSBC Bank Canada is a very strong business and Canada’s leading international bank.
“The review is at an early stage and no decisions have been made.”
Ping An, which holds a stake of over 8% in HSBC, believes that separating the bank’s Asian business will generate an additional market value of up to $35bn and free it from further capital requirements of $8bn owing to its status as a global banking major.
Nearly two-thirds of the profits of the London-based banking group are said to come from Asia.
Its review of the Canadian subsidiary follows its pursuit of cutting costs and curtailing its overseas operations that are not that profitable in order to focus largely on its Asia and Europe businesses.
The banking group is in the process of leaving the Greek market by means of a sale and in South Africa, is planning to focus on international clients instead of domestic banking operations.
