HSBC Holdings Plc (HSBA) is in talks to sell its $9 billion stake in Ping An Insurance (Group) Co. (2318), China’s second-largest insurer, as the U.K. 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 today. Ping An shares fell as much as 3.5 percent in Hong Kong trading, valuing the holding at about HK$71 billion ($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,” Wilson Li, a Shenzhen-based analyst at Guotai Junan Securities Co., 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 today, citing people it didn’t identify.
Charoen Pokphand Group, controlled by Thai billionaire Dhanin Chearavanont, is interested in buying the stake, according to the HKEJ report. Dhanin’s net worth is estimated at $6.1 billion as of Nov. 16, according to the Bloomberg Billionaires Index.
Ping An Shares
Sheng Ruisheng, a Shenzhen-based spokesman for Ping An, said the company doesn’t have any information relating to changes of shareholders.
Shares of Ping An fell 3.1 percent to HK$57.75 as of 2:30 p.m. local time, heading for the lowest close since Sept. 13. HSBC gained 0.7 percent to HK$74.45. The Hang Seng Index rose 0.1 percent.
The insurer’s third-quarter profit rose 21 percent to 2.13 billion yuan as its banking unit contributed more revenue and premium income expanded. An 18 percent increase in Ping An Bank Co.’s profit helped Ping An Insurance Chairman Peter Ma 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.
General Insurance
In March, HSBC said Paris-based Axa SA (CS) will pay about $494 million to acquire its general insurance business in Hong Kong, Singapore and Mexico. Sydney-based QBE Insurance Group Ltd. (QBE) will pay about $420 million for operations in Argentina and a unit of Hang Seng Bank Ltd. (11), a 62 percent-owned subsidiary of HSBC.
The U.K. bank said this month that may face criminal charges from U.S. anti-money-laundering probes and the cost of a settlement may “significantly” exceed the $1.5 billion the bank has set aside. HSBC also put aside $357 million in the period to compensate U.K. clients wrongly sold payment- protection insurance on loans.
HSBC’s earnings growth missed analysts’ estimates in the third quarter, figures showed this month. Underlying pretax profit, which excludes acquisitions and disposals as well as accounting losses on the fair value of HSBC’s own debt, rose to $5.04 billion from $2.24 billion a year earlier, failing to match the $5.6 billion median estimate of eight analysts.
Bloomberg
