HSBC in talks to sell PE divisions

7 June 2010

Up to five HSBC private equity (PE) divisions could be sold off by the bank as part of a strategy to reduce its exposure to risk.

Talks are thought to be underway between the bank and the PE unit managers in the UK, the Middle East, Hong Kong, Canada and the US.

The discussions are expected to result in buy-outs of the divisions by the various management teams involved.

Although no financial details of the potential transactions have been revealed, the units involved are believed to have an estimated $8.8 billion in assets under management.

In a statement quoted by the Wall Street Journal, the bank said: "These discussions are ongoing and further announcements will be made as and when appropriate.”

“Completion will be subject to regulatory and other approvals,” it added.

The move follows debate by the US authorities over new rules for the banking sector.

Legislation proposed by the government is aimed at reducing the risk exposure of deposit taking banks.

The proposals, known as the Volcker Rule, aim to prevent banks from managing hedge funds and making investments in private equity as part of a wider strategy to stabilise the financial services industry.

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