Banking giant HSBC is selling its business in Argentina at a loss of $1 billion (£790 million) due to the country’s unstable exchange rate.
HSBC Argentina, which has more than 100 branches and 3,100 employees, will be bought by Grupo Financiero Galicia, a major private financial group.
Argentina has been facing high inflation, with prices rising rapidly. Last month, annual inflation hit 276.2%, the highest in the world.
The value of the Argentine peso has also dropped significantly over the past five years. In 2017, $1 could buy 43 pesos, but now it’s worth more than 860 pesos.
HSBC has been in Argentina since 1997 and expanded into Brazil as well. However, it sold its retail banking operation in Brazil in 2015.
HSBC has been selling off operations in various parts of the world to focus more on faster-growing markets in Asia.
The sale of its Argentine business will result in a $1 billion loss for HSBC in the first quarter of this year. This loss includes factors like hyperinflation and currency exchange rates.
Over the next year, the business will also recognize $4.9 billion in losses due to currency translation.
HSBC’s CEO, Noel Quinn, explained that selling the Argentine business allows the company to focus on more valuable opportunities internationally. He noted that HSBC Argentina mainly operates domestically and generates earnings volatility when translated into US dollars. Galicia, the buyer, is better suited to invest and grow the business.
