HSBC downsizing in Nicaragua, staying put in rest of region

London-based HSBC (NYSE: HBC) plans to downgrade its Nicaraguan banking operation, Banco HSBC Nicaragua, to a representative office, but will keep its presence unchanged in the rest of the Central American countries where it operates, an HSBC spokesperson told BNamericas. The HSBC group gained presence in Nicaragua in 2006 via the acquisition of the country's smallest bank - former Banco Banistmo - which was part of Panama-based financial group Grupo Banistmo. The group paid US$1.97bn for Grupo Banistmo, whose main units operated in Panama, El Salvador, Costa Rica, Honduras, Nicaragua and Colombia. Through the Banistmo acquisition, HSBC improved its presence in Panama and added five new markets to its global network. The downgrade of HSBC's presence in Nicaragua is a notable change of strategy for HSBC in the Nicaraguan market. In an interview with BNamericas in August 2007, HSBC head of International, Colombia and Central America Alastair Bryce said HSBC would seek to expand its market share in Nicaragua. Bryce said at the time HSBC would be looking to boost its loan market share in Nicaragua to 7% or higher - from 2.5% - in the short to medium-term and increase its presence in retail banking. HSBC's Nicaraguan banking unit finished November 2008 with a 2.0% share of the loan market, statistics from financial regulator Siboif show. So plans have certainly changed. HSBC now will focus on corporate clients in Nicaragua who will be served through the representative office, the HSBC spokesperson said. HSBC has no plans of downgrading its presence in the other Central American countries where it operates, according to the same spokesperson. HSBC's Central American operations include banking and insurance businesses in Panama, El Salvador and Honduras and banking interests in Costa Rica and Nicaragua.