HSBC in talks to sell $9.3 billion China Ping An stake

Mon Nov 19, 2012 7:49am EST
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By Kelvin Soh and Denny Thomas

HONG KONG (Reuters) - HSBC (HSBA.L: Quote) is in talks to sell its $9.3 billion stake in China's Ping An Insurance (2318.HK: Quote), stepping up a program by Europe's biggest bank to shed non-core operations to boost profitability.

A sale, widely expected as part of HSBC's three-year recovery plan after the 2008 financial crisis and regulatory reforms, could earn the bank a pre-tax profit of up to $6.5 billion, Mizuho Securities analyst Jim Antos said.

The bank, which spent $1.7 billion to build a 15.6 percent stake in China's second-largest insurer between 2002 and 2005, confirmed it was in talks to sell the stake, saying that it has "from time to time received approaches regarding its shareholding".

Its statement followed a Monday report by the Hong Kong Economic Journal, a Chinese language newspaper, that named tycoon Dhanin Chearavanont, Thailand's richest man, as a potential buyer.

"This makes sense for HSBC because it has been disposing of so many of its non-core businesses," said Ivan Li, an analyst at Maybank Kim Eng in Hong Kong. "The question that everyone has will be on HSBC's stake in Bank of Communications (601328.SS: Quote)."

HSBC has announced 41 disposals and closures since the start of 2011, and the potential Ping An sale fuelled speculation about other assets that are not integral to its day-to-day business operations.

Its stake in Bank of Communications (BoCom) (3328.HK: Quote), China's fifth-largest lender, stands at 19.9 percent and is worth about HK$79 billion ($10.2 billion), according to Thomson Reuters data.

HSBC has signed up for fundraisings to keep its BoCom stake intact, but it has not paid up for some Ping An cash calls, allowing its holding to be diluted.   Continued...

A bank branch of HSBC is seen in St Helier, Jersey November 11, 2012. REUTERS/Stefan Wermuth