HSBC considering exit from Turkey, says report

Reuters

HSBC(HSBA.L) is considering selling its Turkey business amid concernsabout the country’s volatile currency and economic outlook, sourcesfamiliar with the matter said.

Aspart of broader cost-cutting measures under interim Chief ExecutiveNoel Quinn, the bank is also seeking to sell or shrink its businessin some other markets, the sources said.

Theseinclude countries where it has small-scale operations that struggleto compete with local players, including Armenia, Greece and Oman,they said.

Aspokeswoman for HSBC declined to comment.

HSBCwill seek to sell its banking business in Turkey if it can find alocal buyer, the sources said, adding that no final decision has yetbeen taken.

Thebank’s retreat from Turkey, where it has operated since 1990, wouldbe one of the biggest exits from a country it has made in recentyears as it shrinks its once globe-spanning empire.

HSBChas already shrunk its presence from some 315 branches and around6,000 staff in 2013 to around 80 branches and 2,000 staff as ofSeptember last year, according to data from the Banks Association ofTurkey.

Turkeyhas been a problem country for HSBC in recent years as volatility inthe lira and economic problems have hit its returns, with the bankflagging rising expected loan losses there in its 2018 annual report.

Acurrency crisis in 2018 cut the lira’s value by nearly 30 percent,brought on a brief but sharp recession, and prompted Ankara to clampdown on the financial sector with a series of new rules aimed atstabilizing the currency and kick-starting economic growth.

Thelender previously attempted to sell its business in Turkey in 2015,Reuters reported at the time, with Dutch lender ING among theinterested parties.

Butthe sale never went through, and the lender instead pursued branchclosures and job cuts that saw it swing from a loss in 2014 and 2015to a profit of 456 million lira ($77.02 million) in the first ninemonths of 2019.

Despitethat improved performance, the risks from currency volatility and theeconomic situation mean HSBC still wants to exit, the sources said.

InterimCEO Quinn is expected to announce his cost-cutting measures when thebank reports annual results and its new strategy on Feb. 18.

Quinnis auditioning for the full-time CEO role under chairman Mark Tucker.He is tipped by insiders at the bank to get the job, although itcould yet go to a surprise external candidate.

Thebank is also shedding around 100 roles in its equities business as itscales back in continental Europe, Reuters reported earlier thismonth.