May 22, 2015 / 5:16 AM / in 4 years

HSBC confirms may sell Brazil unit after suitors show interest

HONG KONG/LONDON (Reuters) - HSBC Holdings Plc HBSA.L (0005.HK) is exploring the sale of its Brazilian unit after interest in the business stepped up and Santander’s Brazilian arm said it would consider a purchase.

The HSBC bank logo is pictured at the bank headquarters in Paris April 9, 2015. REUTERS/Gonzalo Fuentes

HSBC said on Friday it was “exploring various strategic options” including a sale of its Brazilian operations. No decision on any transaction had yet been made, it said in a short statement.

Banco Santander Brasil (SANB4.SA) Chief Executive Jesus Zabalza said this week he was studying purchasing terms for the business, though he wanted to see more details before making a decision.

HSBC Chief Executive Stuart Gulliver said in February the bank’s four problem businesses — Brazil, Mexico, Turkey and the United States — needed to improve or be sold.

The bank has started a sales process in Brazil and Turkey, but the U.S. and Mexico businesses were likely to be kept, sources have said.

HSBC is expected to select a preferred bidder for its Brazilian arm as early as next month, Reuters reported on May 13.

Bids for the unit may not surpass book value, which is estimated at around $3.3 billion (2 billion pounds), sources said.

In addition to Santander Brasil there had also been interest from Banco Bradesco (BBDC4.SA), BTG Pactual BBTG11.SA, Canada’s Bank of Nova Scotia (BNS.TO) and China’s ICBC (601398.SS), sources said.

HSBC’s Brazilian and Turkish arms are big businesses but not among the top five banks in either country. HSBC lost $247 million in Brazil and $64 million in Turkey last year, as losses in retail banking offset profits in investment banking in both countries.

Gulliver is expected to give more details on potential disposals at a strategy day on June 9, as part of his attempt to cut costs and simplify the bank to improve profitability and avoid compliance problems.

Reporting By Lawrence White in Hong Kong and Steve Slater in London; Editing by Gopakumar Warrier; editing by Susan Thomas

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