HSBC to Take $3 Billion in Losses on Sale of Troubled French Bank

HSBC said it would receive 1 euro for the bank, equivalent to around $1.19, and that it might be required to put additional cash into the deal, which isn’t expected to close until the first half of 2023. It expects to take a pretax loss of $2.3 billion on the sale, plus a further $700 million goodwill write-down.

Two decades ago, HSBC paid $10.6 billion to acquire Credit Commercial de France, as part of a broad growth strategy to expand its footprint to economies large and small around the world.

Its sale reflects the dire straits of European banks, with slow growth, negative interest rates and regulatory and political obstacles to consolidation.

“It is not expected that the potential transaction will result in any net proceeds of sale for the HSBC Group,” HSBC said.

In 2000, when it bought Credit Commercial de France, the total value of takeovers of European banks was over $90 billion, according to Dealogic. Last year, the value of European banking takeovers slumped to under $50 billion.

Before the global financial crisis, HSBC was one of the most valuable banks in the world. It has since been eclipsed by U.S. rivals and is now worth about $125 billion, less than one-third of the market value of

JPMorgan Chase

& Co.

HSBC once marketed itself as the world’s local bank, but is withdrawing from retail banking in France and the U.S. to refocus on Asia, where it makes most of its profit.

In May, HSBC said it was selling 90 of its 148 branches in the U.S., and plans to wind down another 35 to 40. It agreed to sell parts of its business to two U.S. regional banks,

Citizens Financial Group Inc.’s

Citizens Bank and

Cathay General Bancorp’s

Cathay Bank.

In France, Cerberus plans to combine HSBC’s French retail banking operations with My Money Group, a French lender it acquired in 2017 from

General Electric Co.

Cerberus, which manages about $55 billion, previously acquired Austria’s Bawag Group and Germany’s Hamburg Commercial Bank and bought stakes in

Deutsche Bank AG

and

Commerzbank AG

.

Cerberus’s My Money Group is buying 244 French retail branches from HSBC, with 3,900 employees and 800,000 customers. The French bank said it plans to re-establish the Credit Commercial de France brand.

My Money Group plans to offer HSBC insurance and asset management products in France, but isn’t acquiring those units from the U.K.-based lender.

Write to Simon Clark at simon.clark@wsj.com