FTSE 100-listed HSBC Holdings (GB:HSBA) has agreed to sell its Armenia unit to Ardshinbank as part of its strategic review. The terms of the deal remain undisclosed at the moment. The sale is expected to close in the next twelve months, subject to regulatory approval. The move is a part of HSBC’s efforts to streamline its operations and focus on high-growth markets.
HSBC offers retail, commercial and institutional banking, global banking and markets, wealth management, and private banking solutions. HSBC is considered one of the largest banks in the world and is of systemic importance to the global financial system. HSBC shares have gained over 4% in the past year.
More About HSBC Armenia Sale
HSBC Bank Armenia CJSC (HSBC Armenia), a wholly-owned unit of HSBC Holdings, will be sold to Ardshinbank CJSC, Armenia’s largest banking group by assets.
HSBC noted that all its existing employees and customer accounts will be transferred to Ardshinbank upon completion of the deal. HSBC Armenia has 290 billion Armenian drams worth of total assets, customer loans of 185 billion drams, and customer deposits worth 200 billion drams.
Here’s Why HSBC is Selling Non-Core Assets
As part of HSBC’s strategic review, the British banking giant is offloading non-core businesses and redeploying the capital to “higher-growth opportunities globally.” In this direction, HSBC recently announced the sale of its Canadian operations to the banking giant Royal Bank of Canada (NYSE:RY). The $10.2 billion deal has been approved by the Federal Minister of Finance in Canada and is expected to be completed in the first quarter of 2024, subject to certain closing conditions.
HSBC is taking steps to reduce its global footprint and focus on the high-growth opportunities in Asia. These efforts were pushed by one of HSBC’s largest shareholders, Ping An Asset Management Company, which is forcing the bank to focus on its Asia Pacific business, including a partial listing of the same.
HSBC has dismissed Ping An’s suggestion on the grounds of lower overall benefits to stakeholders. Instead, HSBC is only divesting less strategic and low-connectivity units while focusing on increasing its non-interest income, reducing risk-weighted assets, and bringing down costs amid inflationary pressures. Meanwhile, HSBC is committed to maintaining a dividend payout ratio of 50%, backed by strong financial performance.
Are HSBC Shares a Buy or Sell?
Recently, Barclays analyst Aman Rakkar cut the price target on HSBA shares to 800p (26.3% upside) from 900p, while reiterating a Buy rating.
Overall, with four Buys, four Holds, and one Sell recommendation, HSBA stock has a Moderate Buy consensus rating on TipRanks. The HSBC Holdings plc share price forecast of 1,570.89p implies 148.1% upside potential from current levels.
