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HSBC says considering “sales of office building”

Posted on: April 17, 2009


Reuters – Tuesday, April 14

HONG KONG – Europe’s largest bank, HSBC Holdings <0005.HK><HSBA.L>, confirmed on Monday it was considering selling three of its major office buildings and said it had received interest from potential buyers.

HSBC, which recently raised nearly $19 billion in a rights issue, said it may sell and lease-back office buildings in New York, Paris and London, including its headquarters at Canary Wharf.

London’s Sunday Times reported that HSBC was considering selling three of its biggest office buildings to raise 2.7 billion pounds .

“We are taking a look at the market, yes,” spokesman David Hall said in Hong Kong.

“There are people interested in buying at an appropriate price,” Hall said.

He declined to give further details.

HSBC bought back its building at Canary Wharf for 838 million pounds from ailing Spanish property firm Metrovacesa <MVC.MC> at the end of last year after the Spanish firm failed to refinance a loan secured on the building.

Globally, banks battered by the financial crisis have been looking to shed non-core assets in order to raise capital and improve their balance sheets.

“HSBC has just raised funds from a rights issue and the possible sale of offices could further boost its cash level and thus benefit the bank in its future acquisitions,” said Alex Tang, head of research at Core Pacific-Yamaichi International.

The bank, which planned to shut most of its U.S. consumer lending business, said last month that it was ready for acquisitions in its traditional stronghold of Asia where many banks are pulling out to focus on core markets.

Tang said HSBC shares had been undervalued and the news should be positive to the stock and there were signs that the U.S. housing market was stabilizing.

HSBC’s Hong Kong shares have gained more than 66 percent from its multi-year lows of around HK$30.5 March 9, spurred by improved U.S. data and an easing of accounting rules.

The stock finished up 5.3 percent at HK$50.9 on Thursday before the Easter holidays. But it was still 25 percent below its close of 2008 and underperformed the blue chip Hang Seng Index <.HSI>, which has risen 3.6 percent this year.

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