Updated 11.15pm with HSBC statement
APS Bank is in advanced negotiations to take over HSBC’s Malta operations, according to inside sources who spoke to Times of Malta.
HSBC announced on Wednesday morning that it would be carrying out a “strategic review” of its operations, its clearest hint yet at a possible exit from the country.
Insiders told Times of Malta that negotiations between APS and HSBC’s global shareholders have been underway for several years, ever since it became apparent that HSBC Malta was looking to wind down its operations.
In a company announcement issued late on Wednesday, HSBC Malta said it did not know of any such talks.
HSBC Malta said "it is not aware of any such negotiations taking place between the majority shareholder and APS Bank p.l.c. or any other third party but has requested clarification of the position from its majority shareholder."
The bank's shares fell 18.2% in trading while APS Bank shares rose 11.5%.
HSBC's exit is believed to be driven by the bank's gradual pivot away from Europe and smaller markets towards Asia.
The negotiations are believed to have been sparked by international parties who, knew of HSBC’s intention to leave Malta and approached both banks to see if there was interest.
The discussions did not directly involve HSBC Malta, whose CEO Geoffrey Fichte earlier this year insisted with Times of Malta that the bank was in Malta “for the long run”.
Although negotiations are ongoing, the two parties are believed to agree on several key elements of the deal, including its overall price.
Nevertheless, sources say, advisers on both sides of the negotiating table will work to iron out several details before the deal can be concluded.
The deal would see APS purchase HSBC’s 70% stake in the bank, although it remains to be seen whether HSBC opts to keep a foothold in the market by holding on to a minor share of the pie.
Although negotiations are progressing smoothly, the transition could take some time.
Sources say that regulatory approvals and procedures make it unlikely that the takeover will be completed within the next 18 months.
The move would see APS up its market share significantly, growing to rival that of market leaders BOV and overshadowing all other banks in Malta. Whether this raises any regulatory concerns over competition across the market remains to be seen.
This expansion would effectively mean that HSBC’s customers would eventually be transferred to APS.
The move is not without its doubters.
Some figures in government are believed to be pushing for a foreign buyer, but it is unclear whether any reputable foreign banks have expressed concrete interest in HSBC’s Maltese operations.
HSBC has been quietly chipping away at its European operations and pivoting towards growing its presence in Asia. Reports last year revealed it would be selling or drastically streamlining its presence in 12 European countries, effectively slashing a fifth of its operations.
Sales across several countries followed, from France to Greece to Russia.