HSBC to retreat from Vietnamese Bao Viet group

HSBC plans to sell the shares it is holding of Vietnamese Bao Viet, a big insurance group.

This is meant to gather its strength to deal with the financial problems and the possible heavy penalty in a money laundering lawsuit.

The board of directors of HSBC on July 17 shook the international financial market by admitting before the US Senate that the banking group allowed Mexican drug cartels to launder billions of dollars through its US operations.

Reuters has quoted its sources as reporting that HSBC may face a fine of up to one billion dollars for this. It also quoted Mike Trippitt, an analyst of Oriel securities firm as saying that one billion dollars is equal to five percent of the expected pretax profit of HSBC in 2012, and that the penalty would seriously affect the financial situation of the banking group.

Foreign newspapers have reported that HSBC, in an effort to reshuffle itself and confront with the penalty and the financial problems, is planning to sell the stakes of Bao Viet finance group, which has 130 branches, at 400 million dollars.

According to Dat Viet newspaper, HSBC became the strategic shareholder of Bao Viet in mid September 2007 after it bought 10 percent of the stakes of the finance group at 225 million dollars. An agreement was signed at that time, under which HSBC would hold Bao Viet shares for five years at least.