Household HSBC Watch

HSBC shares dropped in Hong Kong after word that HSBC is considering the sale of 300 to 400 French regional branches. Similar to HSBC’s purchase of Household International in 2003, HSBC acquired the French retail network when it bought out CCF for $12.5 billion in 2000. Activist investor Knight-Vinke said HSBC lacked focus, while many consider the French sale somewhat of an appeasement to Knight-Vinke and other investors. Appeasement is defined as “a policy of accepting the imposed conditions of an aggressor in lieu of armed resistance, usually at the sacrifice of principles.” Thus I use the word here, although you can decide what principles are being sacrificed.

The sale would be part of HSBC’s broader shift from developed markets with more exposure to subprime loans to faster-growing emerging markets, said one person who declined to be identified. Some analysts think HSBC favors less regulation in growing emerging markets.