FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
For the month of July, 2006
HSBC Holdings plc
42nd Floor, 8 Canada
Square, London E14 5HQ, England
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F).
Form 20-F X Form 40-F ......
(Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934).
Yes....... No X
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82- ..............)
HSBC TO EXPAND INTO CENTRAL AMERICA
BY ACQUIRING GRUPO BANISTMO
An agreement has been entered into with Grupo Banistmo S.A. ('Banistmo'), the
leading banking group in Central America, to make a tender offer to acquire all
the outstanding shares of Banistmo, for cash. The transaction values
Panama-based Banistmo at US$1.77 billion.
The Banistmo group's principal area of operation is Panama but the group also
has a significant presence elsewhere in the region where HSBC does not already
operate, providing a solid platform for future growth.
Banistmo owns 99.39 per cent of Panama's largest bank, Primer Banco del Istmo
('Banco del Istmo'), which offers a full range of personal, commercial and
investment banking services through 42 branches. The Banistmo group also owns
the country's largest insurance company, Compania Nacional de Seguros
('Conase').
These operations in Panama will complement HSBC's existing presence in the
country, where HSBC's wholly owned subsidiary, HSBC Bank (Panama) S.A., provides
services to personal and corporate customers through 19 branches.
The Banistmo group also has a significant presence across Central America,
providing a full range of personal and commercial banking services through a
further 106 branches in Costa Rica, Honduras, Colombia and Nicaragua.
Additionally, in February 2006, Banistmo completed the acquisition of a 56 per
cent stake in Inversiones Financieras Bancosal SA, the holding company for Banco
Salvadoreno which operates through 72 branches in El Salvador.
At 31 December 2005, Banistmo had total assets of US$6,973 million and
shareholders' funds of US$695 million. It made a profit after tax^ of US$115
million in 2005. At 31 December 2005, Banco Salvadoreno had total assets of
US$1,778 million, shareholders' funds of US$160.45 million and made a profit
after tax^^ of US$16.9 million during the year.
Stephen Green, Group Chairman of HSBC Holdings plc, said: "We are delighted to
have reached agreement to acquire control of the leading banking group in
Central America. This is the culmination of two and a half years' work examining
the region and choosing our partner.
"This exciting development will give HSBC a strong presence across a fast
growing economic region which, with the ratification of the Central American
Free Trade Agreement ('CAFTA'), has encouraging prospects. It will allow us to
expand into new markets, in a region of 83 million people, including Colombia,
and in which large sections of the population do not currently have bank
accounts.
"We look forward to welcoming Banistmo's customers to HSBC. Banistmo will bring
us significant market share and growth opportunities in all markets. We have
little overlap except in Panama, and we expect to benefit from the scale and
knowledge that Banistmo brings from operating in the region. This acquisition
will enable us to better serve the needs of our regional and international
customers."
Alberto Vallarino, CEO of Banistmo, added: "With its significant international
network, I know that HSBC's acquisition of Banistmo will bring real benefits to
our customers. HSBC has recognised the value of Banistmo's business model and
leadership position in this promising market. This transaction will be a
positive contributor to the region's development."
Upon completion of the acquisition, a senior management team will be selected
from both organisations, and will be led by Sandy Flockhart, an HSBC Group
General Manager and Chairman and CEO of Grupo Financiero HSBC in Mexico.
Under the terms of the agreement, Banistmo shareholders will be entitled to
receive US$52.63 for each share of Banistmo common stock held. The proposed
offer has been unanimously approved and recommended by Banistmo's board of
directors. Additionally, shareholders holding in aggregate 65 per cent of the
issued share capital of Banistmo have entered into an agreement with HSBC to
tender their shares in accordance with the terms of the proposed offer.
The transaction is subject to certain conditions, including the receipt of
regulatory approvals and at least 65 per cent of all the outstanding shares of
Banistmo being tendered in the offer.
HSBC expects to complete the transaction during the fourth quarter of 2006.
Footnotes
^ Under IFRS.
^^ Under El Salvador GAAP.
1. HSBC in Panama
HSBC has been present in Panama since 1972. HSBC Bank (Panama) S.A. has 19
branches and 70 ATMs, distributed among the cities of Panama, Colon, Aguadulce,
Chitre and David, providing a full range of banking products and services
including commercial and consumer banking, HSBC Premier, private banking and
corporate banking. In 2005, HSBC Bank (Panama) S.A. acquired the entire share
capital of the Financomer Group in Panama for a cash consideration of
US$21million.
2. HSBC Holdings plc.
HSBC Asia Holdings BV is a wholly owned subsidiary of HSBC Holdings plc. The
Group serves over 125 million customers worldwide through some 9,500 offices in
76 countries and territories in Europe, the Asia-Pacific region, the Americas,
the Middle East and Africa. With assets of US$1,502 billion at 31 December 2005,
HSBC is one of the world's largest banking and financial services organisations.
HSBC is marketed worldwide as 'the world's local bank'.
3. Grupo Banistmo, S.A.
Grupo Banistmo is the leading banking group in Central America, with operations
in Panama, Colombia, Costa Rica, Nicaragua, Honduras, El Salvador and Bahamas.
At 31 December 2005, Grupo Banistmo had assets of US$6,973 million and
shareholders' funds of US$695 million.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HSBC Holdings plc
By:
Name: P A Stafford
Title: Assistant Group Secretary
Date: 21 July, 2006