HSBC's proposed acquisition of Bital, Mexico's fifth-largest bank, may suck the global banking giant into the worsening financial turmoil in the Latin American region, analysts warn.
BNP Paribas Peregrine analyst Patrick Ho Wai-wa said the purchase would increase the risks of HSBC's North and Latin American portfolios.
'Nobody predicted Argentina's financial meltdown would spread to Brazil, but it did,' Mr Ho said.
'The spillover effect poses a threat to banks' earnings in the region.'
Another analyst said: 'Financial crises in Latin America come around every several years,' adding that HSBC may be exposing itself to a time bomb as financial instability in the region could erupt anytime.
In the face of financial turbulence and wild fluctuations in currencies, HSBC might eventually have problems with non-performing loans, an analyst said.
An HSBC spokesman confirmed yesterday that the group was in talks to buy Bital as part of an attempt to further expand in Latin America.