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HSBC in talks over sale of Ping An stake

By Simon Rabinovitch
updated 4:52 AM EST, Mon November 19, 2012
An HSBC bank branch is pictured in central London on August 1, 2011.
An HSBC bank branch is pictured in central London on August 1, 2011.
STORY HIGHLIGHTS
  • The bank's stake in Ping An is worth $9.5bn, nearly triple the $3.5bn in savings that HSBC has targeted before 2014
  • Thai billionaire Dhanin Chearavanont, who controls the Charoen Pokphand Group, is among the possible buyers
  • HSBC has been the most active of the foreign banks in pursuing organic growth in China.

(Finacial Times) -- HSBC is considering selling its stake in Ping An Insurance, China's second-biggest insurer by assets, as part of its global drive to improve profitability.

The bank's 15.6 per cent stake in Ping An is worth $9.5bn, nearly triple the $3.5bn in savings that HSBC has targeted before 2014.

"HSBC has from to time received approaches regarding its shareholding and confirms that it is in discussions which may or may not lead to the sale of the shares," the bank said on Monday.

Shares in Ping An Insurance fell 2.7 per cent in Monday morning trading in Hong Kong, weighed down by talk of the potential sale.

According to the Hong Kong Economic Journal, a Chinese-language newspaper, Thai billionaire Dhanin Chearavanont, who controls the Charoen Pokphand Group, is among the possible buyers.

When HSBC announced its plan for hefty cost savings last year, chief executive Stuart Gulliver said the UK bank had no plans to sell any of its big stakes in Chinese financial institutions including its holding in Ping An.

But Ping An is the second most important of HSBC's stakes in China. The most important is its 19.9 per cent stake in Bank of Communications, the country's fifth-biggest bank. HSBC has said that it would like to increase its holding if given regulatory approval, though foreign banks are currently capped at 20 per cent stakes in domestic banks. HSBC subscribed earlier this year to a $8.9bn share sale by BoCom to avoid dilution.

HSBC said it remained committed to expanding in China. Apart from BoCom and Ping An, HSBC has an 8 per cent stake in Bank of Shanghai.

HSBC has also been the most active of the foreign banks in pursuing organic growth in China. It has 131 banking outlets throughout the country, according to its website.

Ping An has been the best performer of China's insurance companies in recent years, benefiting from a more aggressive sales and marketing approach. Net profit was up 21 per cent year-on-year in the third quarter, making Ping An the only one of the country's top insurers to report positive earnings growth.

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