HSBC has announced that it has agreed to sell all of its banking operations in Argentina to Grupo Financiero Galicia.

Grupo Financiero Galicia is one of the largest private financial groups in Argentina.

The deal is worth $550m, subject to certain price adjustments. It is expected to be completed within the next 12 months.

As a result of the deal a $1bn pre-tax loss on disposal will be recognised in Q1 for this year.

HSBC continues to exit markets across the world

This follows a recent trend for HSBC as it leaves numerous markets around the world. HSBC recently completed the sale of its French banking unit and completed the sale of its Canada based operations to RBC.

Noel Quinn, HSBC Group Chief Executive, said: “We are pleased to agree the sale of HSBC Argentina. 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.”

“HSBC Argentina is largely a domestically focused business, with limited connectivity to the rest of our international network. 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.

“We remain committed to Mexico and the US, and to serving our international clients throughout our global network with our leading transaction banking capabilities.”

There will be an insignificant impact on the Group’s common equity tier 1 (CET1) ratio by closing. At closing, $4.9bn of historical cumulative foreign currency translation reserve losses will be recognised in the income statement. These have already been recognised in capital and will have no impact on CET1 or tangible net asset value. The transaction will be treated as a material notable item and excluded from the dividend payout calculation.