"This transaction is another important step in the execution of our strategy and enables us to focus our resources on higher value opportunities across our international network," chief executive Noel Quinn said in a statement.
The London-listed lender expects to take a $1.0 billion pre-tax loss on the disposal in the first quarter, while the price is subject to adjustments depending on the performance of the business before the deal closes, it added.
"HSBC Argentina is largely a domestically focused business, with limited connectivity to the rest of our international network," Quinn said.
"Furthermore, given its size, it also generates substantial earnings volatility for the group when its results are translated into US dollars.
"Galicia is better placed to invest in and grow the business."
Argentina's economy is plagued by triple-digit annual inflation that stands at over 200 percent, and a highly volatile peso currency.
HSBC added Tuesday that following the deal's close, it would write off $4.9 billion in historical foreign exchange losses, partly linked to the sharp devaluation of the peso announced late last year by Argentina's President Javier Milei.
The Argentina business has a network of more than 100 branches and employs 3,100 people. It has around one million customers and generated revenues last year totalling $774 million.
Quinn said HSBC remained committed to its business in Mexico and the United States, and to serving international clients across its global network.
The bank's latest divestment comes after it concluded the sale last month of its Canadian operations to Royal Bank of Canada for $10.1 billion, in a transaction first announced in late 2022.
In Europe, the lender sold its retail banking operations in France at the start of the year for an undisclosed amount to My Money Group, which is controlled by the US private equity fund Cerberus.
The move is part of HSBC's strategy to simplify and refocus operations on its major region of Asia.
HSBC in February posted soaring annual profits thanks to ballooning global interest rates, but also revealed a massive impairment charge linked to property-sector woes in China.
Its performance was rocked by a $3 billion impairment linked to its 19 percent stake in China's Bank of Communications, which was hit by property loan write-offs.
The Argentina disposal is expected to be completed during the next twelve months, and remains subject to conditions including regulatory approvals.
ode-rfj/js
Related Links
Global Trade News
| Subscribe Free To Our Daily Newsletters |
| Subscribe Free To Our Daily Newsletters |
