HSBC, Europe's largest bank, today agreed the sale of its 15.6 per cent stake in Chinese insurance giant Ping An for $9.4bn (£5.8bn).
It is the latest and by far the largest move by chief executive Stuart Gulliver, pictured below, to focus HSBC on its most profitable businesses and withdraw from non-core activities.
HSBC will book a profit of some $2.6bn on the sale to Thailand's Charoen Pokphand Group which is controlled overall by the country's richest man Dhanin Chearavanont.
Last year, the stake in Ping An contributed $964m to HSBC's profits. It is one of the world's biggest insurance businesses with about 74 million customers and approximately half a million agents. The sale proceeds will raise HSBC's core tier 1 capital ratio – the key measure of balance-sheet strength – by 0.5 per cent to 12.1 per cent, making it one of the strongest in Europe.
Gulliver, said: "This transaction represents further progress in the execution of the group's strategy. China remains a key market for the group and we will strengthen our focus on growing our own operations and building on our long-term strategic banking partnership with the Bank of Communications."
HSBC has a 19 per cent stake in the Chinese Bank of Communications.
Today's deal is Charoen Pokphand's first major venture into the financial services world.
Up until now it has concentrated on agricultural feeds for poultry and pigs, ready meals and motorcycle manufacturing.