The largest single property deal in UK history was struck today as HSBC offloaded its iconic Canary Wharf headquarters for almost £1.1 billion and agreed to rent it back for £43.5 million a year.

Under the terms of a sale and leaseback deal agreed with Spanish property group Metrovacesa, HSBC, one of the world's largest banks, has locked in its annual rent payments for 20 years with an option to extend the agreement for a further five.

By the end of the 20-year period, HSBC will have paid Metrovacesa £870 million in rent.

It is thought the bank received at least 15 expressions of interest in the tower, which was marketed with a price tag of £1 billion.

HSBC's 8 Canada Square residence is a centrepiece of the Canary Wharf skyline. The 1.1 million square foot building, which towers 210 metres high, has only recently become its worldwide headquarters. The bank, joined by other financial heavyweights such as Barclays and Citigroup, relocated to the Wharf in 2002 after unveiling plans to move HQ almost 10 years ago.

Such is the size of its tower, which cost £500 million to build, that its staff canteen is said to be Europe's largest restaurant. It also boast shops, a medical centre and a gym that spans an entire floor.

HSBC said its 8,000 staff would continue to use the skyscraper as its headquarters and it would retain full occupancy. Metrovacesa, one of Europe's largest quoted property companies, takes a 998-year lease.

David Hodgkinson, HSBC's chief operating officer, said the sale and leaseback "is a good opportunity for HSBC to manage its property assets effectively".

Metrovacesa said buying the building showed its commitment to be a major force in major international cities and be one of the world's leading property investors.

Metrovacesa is Spain's biggest quoted real estate company in which the Sanhuja's Cresa Patrimonial company owns a 24 per cent stake.

It plans to split into two separate units holding its Spanish and French assets in a deal which will see Cresa with around 80 per cent of Metrovacesa's assets.

The HSBC deal will act as a springboard for the Spanish firm buying more UK assets.

The deal is expected to complete within the next two months.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive