LONDON, June 18 (Reuters Breakingviews) – Cleaning can be expensive. This is the lesson of HSBC (HSBA.L), (0005.HK) the possible sale by the Managing Director Noel Quinn of its French distribution network to a company backed by Cerberus Capital Management read more. It will shift the loss-making activity to a tangible book value of $ 2 billion, with HSBC filling any gaps in the balance sheet once the deal is done. If you add in other transaction expenses, the transaction will cost HSBC around $ 2.3 billion in total, down 15 basis points from its Tier 1 capital ratio of 15.9%.

Quinn could have avoided the blow by turning the affair around him. But the layoffs and ensuing union battles would consume management’s time and bandwidth. Better to look at the $ 2.3 billion as the cost of a sharper European focus. Other mainland businesses will target wholesale customers rather than consumers. Quinn can begin to integrate the region’s IT systems and reduce shared costs. In this case, a bad deal is better than nothing. (By proud Liam)

On Twitter http://twitter.com/breakingviews

Capital Calls – More Concise Information About Global Finance:

Acciona IPO collapses under green power discount read more

Brazilian JBS attacks “Global Britain” read more

Beijing’s jab rate shames Hong Kong read more

JPMorgan spices up its British pitch read more

Paris catches up with Frankfurt in the SPAC race read more

SIGN UP FOR BREAKINGVIEWS E-MAIL ALERTS: http://bit.ly/BVsubscribe | Editing by Ed Cropley and Karen Kwok