SÃO PAULO: HSBC Holdings PLC closed 21 branches across Brazil last year amid tepid economic activity in the Latin America nation.
The Brazilian economy expanded at a rate close to zero last year, according to economists’ projections.
“We continued to rationalize our branch network, closing 21 branches in areas with lower growth potential as we concentrated our efforts on city clusters with faster-growing revenue pools,” HSBC said in a statement.
HSBC has 853 branches in Brazil, according to the country’s central bank website.
The bank’s Brazilian operations posted a loss before tax of $247 million, reversing from a profit of $351 million in 2013.
The bank’s Brazilian operation was the only Latin Americas unit to register a loss in the period.
“The level of economic activity was broadly unchanged in 2014 following growth of 2.5% in 2013, but deteriorating business confidence and the resulting contraction in business investment spending were the main factors behind the economic slowdown,” HSBC said.
In recent years, international banks saw a reduction of their operations in Brazil amid an increase in competition of local banks and as the need for capital increases in their respective homelands.
“Foreign-owned banks’ participation in Brazil has already been on a declining trend, dropping to 14.7% of total assets, as of September 2014, down from 20.9% in December 2008,” Fitch Ratings said in a recent report. “Foreign bank deleveraging and the tighter capital rules affecting European and North American banks have been headwinds that have generally limited the appetites of foreign banks expanding in Brazil.”
“The conditions have been helpful for the private and public domestic banks, which collectively have further expanded their dominance in the market,” the rating agency added.
