Banking titan HSBC has signalled a further scaling back of its European ventures with the divestment of its UK life protection business to insurance entity Chesnara.
HSBC has parted with the unit for £260m, a transaction Chesnara plans to finance through external means, credit facilities, and an equity raise, as reported by City AM.
The disposal is part of Georges Elhedery’s extensive restructuring at the bank since he assumed leadership last year.
Elhedery outlined his vision for a “simpler, more dynamic and agile organisation” when he first unveiled his strategic overhaul in October 2024, which included bifurcating the business into “eastern markets” focusing on Asia-Pacific and the Middle East, and “western” targeting the Americas and Europe.
However, the offloading of the UK insurance segment is the latest step indicating a retreat from European engagements.
This move follows the bank’s reduction of 348 roles in France, equating to around 10% of its workforce there, and the divestiture of its French retail banking operations to CCF, part of the My Money Group.
Conversely, Elhedery has set his sights on expansion opportunities in Asia, lauding the region’s performance in a letter to shareholders within the bank’s annual report. HSBC noted a $75bn uptick in customer accounts, predominantly in Asia, on a constant currency basis.
Chesnara eyes FTSE 250
On the heels of this acquisition, Chesnara anticipates enhancing its footprint. As of December 31, 2024, HSBC Life held funds amounting to £314m.
On Thursday, the firm announced that it expects to meet the criteria for inclusion in the FTSE 250 after a boost in liquidity resulted from its deal. The acquisition is predicted to generate cash in excess of £800m for Chesnara, with an estimated £140m during the initial five years post-acquisition.
Moreover, Chesnara is projecting an uplift in its full-year and interim 2026 dividends, anticipating an adjustment upwards by six per cent.
Steve Murray, the company’s chief executive, shared his perspective on the acquisition of HSBC Life (UK), saying: “The proposed acquisition of HSBC Life (UK) represents a material step up in scale for Chesnara Group.”
Murray further emphasised the strategic benefits of the acquisition, asserting: “This highly accretive transaction will allow us to build on our strong, 20-year track record of uninterrupted dividend growth.”
