December 3, 2020

DealBook: HSBC Sells Stake in Chinese Insurer for $9.4 Billion

HONG KONG — HSBC Holdings, one of Europe’s biggest banks, said Wednesday it would sell its entire stake in a leading Chinese insurer to a Thai conglomerate for 72.7 billion Hong Kong dollars ($9.4 billion.)

HSBC said it would sell its 15.6 percent stake in Ping An Insurance, based in Shenzhen, to the Charoen Pokphand Group, controlled by the Thai billionaire Dhanin Chearavanont, in a deal to be financed partly by the China Development Bank, a policy lender wholly owned by the state of China.

HSBC headquarters in Hong Kong.Bobby Yip/ReutersHSBC headquarters in Hong Kong.

HSBC has been shedding assets to cut costs and streamline its business, and at the same time bolstering its balance sheet in the face of tighter global capital requirements for banks. Since Stuart T. Gulliver took over as chief executive at the beginning of 2011, the bank, which is based in London, has sold more than 40 noncore assets and has booked about $4 billion in gains on those sales this year alone.

HSBC disclosed last month that it was in talks over a potential sale of its Ping An stake, which it started building in 2002, and said Wednesday it expected to book a post-tax gain of $2.6 billion on completion of the deal with the Thai company.

‘‘This transaction represents further progress in the execution of the group’s strategy,’’ Mr. Gulliver said in a statement announcing the sale. ‘‘China remains a key market for the group.’’

Founded in Hong Kong and Shanghai almost 150 years ago, HSBC currently operates 133 outlets across 33 branch offices in mainland China. After the Ping An stake sale it will retain minority investments in several Chinese lenders, including a 19.9 percent stake in the Bank of Communications that is worth around $10 billion at current share prices, a stake in Industrial Bank, a midtier institution based in Fujian Province, and an 8 percent stake in the Bank of Shanghai.

The two-part Ping An transaction will see Charoen Pokphand, a conglomerate with businesses ranging from distribution of agricultural products like fresh eggs to operating one of the world’s biggest chains of 7-11 convenience stores, purchase 1.2 billion Ping An shares from HSBC at a price of 59 Hong Kong dollars ($7.61) apiece.

HSBC said it would transfer 21 percent of the shares to the Thai group on Friday. The sale of the remaining 79 percent of the shares at the same price is being financed partly with cash and partly by a loan from the China Development Bank to Charoen Pokphand, and the transfer of those shares is expected to be completed by Jan. 7, contingent on receiving approval from the China Insurance Regulatory Commission.

Shares in Ping An rose 4 percent to 60 Hong Kong dollars in late morning trading in Hong Kong on Wednesday following the announcement — exceeding the stake sale price by 1 dollar in a sign investors are confident the transaction will go ahead. Shares in HSBC rose 1 percent to 79.50 Hong Kong dollars by late morning, and are up around 35 percent in the year to date.

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Qaddafi Reportedly Stashes Billions in Western Institutions

PARIS — Col. Muammar el-Qaddafi has stashed billions of dollars of Libyan oil revenues with financial institutions on Wall Street and in Europe, according to a document made public Thursday by an international advocacy group.

Goldman Sachs, JP Morgan, HSBC Holdings and Société Générale are among the major banks that have helped the strongman to invest some of the Libyan sovereign wealth fund’s $53 billion, according to the document, which was published on the Web by Global Witness.

NATO warplanes have been carrying out air raids against Colonel Qaddafi’s forces since March in an effort to drive him from power, and the International Criminal Court’s chief prosecutor is seeking his arrest for alleged crimes against humanity.

The document, independently verified as authentic by The New York Times, is a summary of the Libyan Investment Authority’s investments, created for the fund by the London office of the KPMG consulting firm and dated June 30, 2010.

It shows Goldman Sachs holding $43 million in three accounts and HSBC holding $292.69 million across 10 accounts. The Libyan fund also invested $1 billion in structured financial products through Société Générale, and $171 million worth of such instruments through JPMorgan Chase.

The market value of the fund’s investments fell 4.53 percent in the second quarter of 2010 from the first quarter, to $53.3 billion, the report showed.

The sovereign wealth fund invested $19 billion in Libyan and Middle Eastern banks, including the Central Bank of Libya, the Arab Banking Corporation and the British Arab Commercial Bank, according to the report.

The fund also invested billions of dollars in the stocks of well-known companies, including General Electric, Halliburton, BP and Nokia, and held a large portfolio of United States government bonds.

The investments appear to have been legal at the time, although the United Nations, the European Union and the United States in February imposed targeted financial sanctions against the assets of Colonel Qaddafi and his family. The United States also froze the assets of Libyan government-owned and controlled entities.

“The Qaddafi family has significant personal control over the state funds invested in the Libyan Investment Authority,” Global Witness said in a statement. “According to the prosecutor of the International Criminal Court, “Qaddafi makes no distinction between his personal assets and the resources of the country.”

The organization called on banking regulators “to investigate whether these banks have done enough to ensure that state funds have not been diverted to the Gaddafi family’s personal benefit.”

Global Witness said the report showed that banks and investment houses should be required to disclose state funds that they manage, as “This would cost nothing and would allow citizens to see that state revenue is not being stolen by corrupt leaders.”

Fiona Laffan, a Goldman Sachs spokeswoman declined to comment, as did Jezz Farr, a spokesman for HSBC. JPMorgan Chase did not immediately return calls

Laura Schalk, a spokeswoman for Société Générale, said the French bank “deals with many sovereign funds and complies with all applicable rules and regulations in that matter, but we can’t comment on specific clients or transactions.”

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