HSBC reiterated its shifting focus towards emerging markets, yesterday announcing it was selling its regional French banking division for €2.1 billion.

Britain’s biggest bank has entered into exclusive negotiations with the French mutual, Banque Populaire, after it made a firm cash offer for the 400-branch business.

The assets comprise seven regional banks in the southern half of the country including Societe Marseillaise de Credit, Banque de Savoie, Banque Chaix and Banque Marze.

HSBC acquired the business, which are run semi-autonomously and do not carry the HSBC brand, when it bought the wider banking group CCF in 2000.

Several other bidders including CIC and BNP Paribas are thought to have taken a look at the business, which achieved a price tag of 21 times profits and 3.7 times shareholders equity.

Stephen Green, chairman of HSBC, said: “This is an opportunity to redeploy capital to other investments as we ... rebalance our activities towards emerging markets and faster-growing business segments.”

HSBC last year committed itself to investing predominantly in emerging markets after coming under fire from activist investor Knight Vinke for neglecting its Far East heritage in pursuit of the slower-growth markets of the West.

The deal requires regulatory approval and could take up to six months to complete.

Banque Populaire is one of the biggest retail banking groups in France, with 7 million customers and 2,900 branches. In 2006 it made €1.7 billion in net profits.

Philippe Dupont, chairman and chief executive, pledged to retain the brand names and individual identities of the seven banks.

HSBC will continue to operate in France through its HSBC-branded network

HSBC is expected to report a 12 per cent rise in annual profit to a record $24.7 billion when it wraps up the UK bank reporting season on Monday.

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