HSBC made a £250 million profit yesterday when it bought back its London headquarters from Metrovacesa, the troubled Spanish property company.

Twenty months after selling the 45-storey skyscraper at Canary Wharf, HSBC completed a deal to buy it back for £838 million. The bank had sold the tower — 8 Canada Square — in April 2007 for £1.09 billion, setting a record as London's most expensive single-property transaction. HSBC said that a bridging loan that it made to Metrovacesa upon the original purchase would be “extinguished”. The deal would be subject some retentions and warranties, the bank said.

HSBC's shares responded with a rise of 0.1 per cent to 710p, against a fall of 1 per cent in the wider FTSE 100 index.

David Hodgkinson, group chief operating officer of HSBC Holdings, said: “Clearly, the market has deteriorated significantly since we agreed the sale in spring 2007. It was important to work with our client Metrovacesa to resolve the funding issue which had arisen; 8 Canada Square is a landmark building and this transaction is in the best interests of both parties and HSBC shareholders.”

The deal ends a year of speculation about future ownership of the building, known as the HSBC Tower. Metrovacesa bought it in a sale-and-leaseback transaction at the peak of Britain's debt-fuelled property boom.

A gain on the sale was not recorded in last year's HSBC accounts because the medium-term funding of an £810 million bridging loan on the sale had not been finalised. Under the deal, HSBC agreed to lease the building back for 20 years at an initial annual rent of £43.5 million, representing a net initial yield of 3.8 per cent.

HSBC agreed to buy back the tower after the Spanish developer failed to meet a November 27 deadline to repay its £810 million loan on the property.

Metrovacesa, like many big Spanish property developers, has struggled with rising debt after the collapse of the construction sector in Spain came at the same time as the global credit crunch.

Since Metrovacesa's purchase of the HSBC building, London commercial property prices have fallen by a third, according to Investment Property Databank. The fall in the building's value deterred Metrovacesa's lenders from providing more credit to keep the property. Metrovacesa ran up debt of €7.1 billion (£6.1 billion) by buying property across Europe. This week it did a debt-for-equity swap with creditor banks, which take a 54.75 per cent stake in the group.

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