HSBC considers £6bn mega-sale after approach for insurer Ping An
Monday 19 November 2012
HSBC, Europe’s largest bank, could be about to make its largest asset sale since chief executive Stuart Gulliver revealed his three-year $3.5 billion cost-cutting and rationalisation plan 18 months ago.
It admitted today that it has a received an approach for its 15.6% stake in Chinese insurer Ping An and is considering selling it in a deal which might raise more than $9 billion (£5.7 billion).
That would be useful in settling money-laundering charges with US regulators which the bank recently admitted will possibly cost more than $1.5 billion.
Gulliver originally said that selling the group’s large Chinese shareholdings — including 19.9% of Bank of Communications — was not part of his plan.
HSBC paid around $1.7 billion buying into Ping An in 2002 and again in 2005. That means it would walk away with a profit of almost $7 billion which could be used to boost its balance sheet at a time when regulators are demanding banks retain more cash against risks.
The bank issued a brief statement in Hong Kong and London in response to press reports in the former colony. “HSBC has from time to time received approaches regarding its shareholding and confirms that it is in discussions.”
The statement followed a report in the Hong Kong Economic Journal which said that the bank was in talks to sell the shares to Chia Tai Group, a company controlled by Thai tycoon Dhanin Chearavanont.
HSBC has so far sold off or closed around 41 businesses and reduced its balance sheet as measured by risk-weighted assets by some $55 billion.
A sale would require approval from China’s insurance and banking regulators, narrowing the list of possible buyers, as Chinese authorities have traditionally allowed only financial groups to take stakes in the country’s major banks and insurers. Chia Tai is a food and agriculture conglomerate.
Another challenge to a Ping An sale is the $4 billion IPO of Chinese insurer, Pacific Insurance Company of China Group, which could attract strategic buyers who might otherwise have bought HSBC’s Ping An stake. Ping An shares fell around 3% on the news and HSBC’s rose 10.55p to 660.35p.
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