A share of approximately $9.3 billion of the Chinese insurer will be sold.
The latest insurance news from HSBC is that it is currently in negotiations to sell its stake of the Chinese insurer, Ping An, which is worth approximately $9.3 billion.
The intention is to boost the profitability of this largest bank in Europe.
It will be accomplished as a part of a larger effort to slough away some of its non-core operations. The sale of the Ping An stake is not unexpected insurance news. It was relatively anticipated as a part of the three year recovery plan from HSBC. The regulatory reforms and the financial crisis of 2008 required it to make this sort of move.
This insurance news could bring a pre-tax profit to the bank of up to $6.5 billion.
This data is according to Jim Antos, an analyst from Mizuho Securities. HSBC had previously spent $1.7 billion in order to grow a stake worth 15.6 percent of the second largest insurer in China, from 2002 through 2005. The bank has now confirmed the insurance news that they are currently in talks to shed this stake. They said that they have “from time to time received approaches regarding its shareholding.”
This insurance news statement followed a report that was released on Monday by the Hong Kong Economic Journal, which declared that Thailands richest man, Dhanin Chearavanont, was a prospective buyer.
According to a Maybank Kim Eng analyst in Hong Kong, Ivan Li, “This makes sense for HSBC because it has been disposing of so many of its non-core businesses.” He added that “The question that everyone has will be on HSBC’s stake in Bank of Communications.”
Since the beginning of 2001, HSBC has made 41 insurance news announcements regarding closures and disposals. The possible sale of Ping An has been building speculation regarding some of the bank’s other assets that are not considered to be vital to its core business operations. For example, it also has a 19.9 percent stake in the fifth largest lender in China, the Bank of Communications, which Thomson Reuters data estimates to be worth approximately $10.2 billion.