HSBC Holdings PLC is in talks to sell its US$9 billion stake in Ping An Insurance (Group) Co (中國平安保險集團), China’s second-largest insurer, as the UK bank sheds assets to revive profit growth.
Europe’s largest lender by market value “is in discussions which may or may not lead to the sale of the shares,” HSBC said in a statement yesterday.
Ping An shares fell as much as 3.5 percent in Hong Kong trading, valuing the holding at about HK$71 billion (US$9.2 billion).
HSBC chief executive officer Stuart Gulliver’s attempts to cut costs have been hampered by probes into money laundering and compensation claims, increasing pressure for asset sales. The London-based lender agreed to sell some general insurance units in Asia and Latin America earlier this year.
“HSBC can reinvest the proceeds from the share sale in its organic business in China,” Shenzhen-based Guotai Junan Securities Co (國泰君安證券) analyst Wilson Li said by telephone. “That would actually generate more benefits than the existing investment in Ping An.”
The bank plans to sell all of its 1.23 billion Hong Kong-traded shares in Ping An, which represents about 40 percent of the insurance company’s Hong Kong-traded shares and 15.6 percent of all Ping An stock, the Hong Kong Economic Journal reported earlier yesterday, citing people it did not identify.
Charoen Pokphand Group, controlled by Thai billionaire Dhanin Chearavanont, is interested in buying the stake, according to the report. Dhanin’s net worth is estimated at US$6.1 billion as of Friday, according to the Bloomberg Billionaires Index.
Shenzhen-based Ping An spokesman Sheng Ruisheng (盛瑞生) said the company did not have any information relating to changes of shareholders.
The insurer’s third-quarter profit rose 21 percent to 2.13 billion yuan (US$341.64 million) as its banking unit contributed more revenue and premium income expanded. An 18 percent increase in Ping An Bank Co’s (平安銀行) profit helped Ping An Insurance chairman Peter Ma (馬明哲) buffer the effect of a slump in the value of the insurance company’s equity holdings as China’s economy cooled.
HSBC is among European banks selling assets as lenders brace for stricter global capital rules and cope with the region’s sovereign debt crisis. The bank has disposed of assets from Japan to Thailand and Costa Rica over the past year.
In March, HSBC said Paris-based Axa SA would pay about US$494 million to acquire its general insurance business in Hong Kong, Singapore and Mexico. Sydney-based QBE Insurance Group Ltd will pay about US$420 million for operations in Argentina and a unit of Hang Seng Bank Ltd., a 62 percent-owned subsidiary of HSBC.
The UK bank said this month that it may face criminal charges from US anti-money-laundering probes and the cost of a settlement may “significantly” exceed the US$1.5 billion the bank has set aside. HSBC also put aside US$357 million in the period to compensate UK clients wrongly sold payment-protection insurance on loans.