HSBC said it was in talks to sell its $9.3 billion stake in China's Ping An Insurance, stepping up a program by Europe's biggest bank to shed non-core parts of its business to boost profitability, Reuters reported.
HSBC spent $1.7 billion to build up a 15.6 percent stake in China's second-largest insurer in 2002 and 2005, but a sale has been widely expected as part of its three-year recovery plan in the wake of the 2008 financial crisis and regulatory reforms.
In a statement to the Hong Kong Stock Exchange, the bank confirmed it was in talks to sell the stake, adding that a sale may not result. The statement followed a Monday report on the sale talks by the Hong Kong Economic Journal, a Chinese language newspaper, naming Thai tycoon Dhanin Chearavanont, Thailand's richest man, as a potential buyer.
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 core to its day-to-day business operations.
"This makes sense for HSBC because it's 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."
HSBC owns 19.9 percent of Bank of Communications, China's No.5 lender, worth about HK$79 billion ($10.2 billion), according to Thomson Reuters data.
HSBC will record a pre-tax profit of up to $6.5 billion if it sells the Ping An stake, according to estimates from Mizuho Securities analyst Jim Antos.
