HSBC's exit from Turkey's retail banking market no easy task
Retail business may be sold for book value given tough local market and lack of potential buyers
HSBC faces a tough task selling its loss-making retail arm in Turkey, where it has been hamstrung by tough competition and faces a decline in both economic growth and investor confidence.
Chief executive Stuart Gulliver said in February HSBC's four problem businesses - Brazil, Mexico, Turkey and the US - needed to improve or be sold.
The bank has started the process of selling the Turkish retail business, according to sources.
That may prove hard as HSBC's network of nearly 300 branches is not enough to provide a new entrant with sufficient scale, yet too costly for smaller local players.
"It will not be an easy sale. Big Turkish banks already have many branches, so buying HSBC's branches would not make much sense for them," said an investment banker.
"A newcomer would be more interested in buying its banking licence rather than its branches. There isn't much appetite for Turkish banks now, and foreign banks aren't sitting on loads of cash either."
To cut costs and reduce complexity, the London-based lender is pulling out of countries and businesses that are unprofitable or lack scale. It is also expected to sell its retail arm in Brazil.