Chinese Insurer Ping An Becomes No. 2 Shareholder at HSBC -- WSJ
December 08 2017 - 3:02AM
Dow Jones News
By Julie Steinberg
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 8, 2017).
One of China's biggest insurers has become the second-largest
shareholder of HSBC Holdings PLC, but it won't influence how the
U.K.-based bank is run, HSBC's departing Chief Executive Stuart
Gulliver said Thursday.
Ping An Insurance (Group) Co. of China Ltd.'s investment is a
financial move and not a strategic one, Mr. Gulliver told reporters
at an event in Shenzhen, after the Chinese insurer said late
Wednesday that its stake in HSBC rose to more than 5%.
Mr. Gulliver said the bank welcomed the investment and had been
having regular conversations with Ping An, which began building its
stake in the second quarter of last year. The investment by Ping
An's asset-management unit, which wasn't funded by the insurer's
equity, makes Ping An HSBC's second-largest shareholder after
BlackRock Inc.
The world's largest insurer by market capitalization said it
bought a total of 1.02 billion HSBC shares through the southbound
Stock Connect program, which allows mainland Chinese companies to
buy Hong Kong-listed shares. Ping An said the investment was driven
by HSBC's dividends and reflects its principle of matching assets
and liabilities.
The investment also marks a reversal of Ping An's ties with
HSBC, which in 2012 sold its 15.6% stake in the insurer to a
conglomerate controlled by Thai tycoon Dhanin Chearavanont for
$9.39 billion.
Mr. Gulliver also outlined HSBC's growth plans for southern
China's Pearl River Delta region, which is the focus of the bank's
Asia strategy. HSBC plans to employ about 5,000 staff at its
branches in Guangdong province by 2020, more than double its
current head count.
Separately, HSBC will boost head count at its newly established
securities joint-venture in China to about 300 employees, from
about 100 currently. The joint venture with Qianhai Financial
Holdings Co., in which HSBC owns a 51% stake, allows the bank to
underwrite initial public offerings and trade securities and
bonds.
The planned expansion in China is part of the bank's pivot to
Asia announced in 2015. Mr. Gulliver said he expects the Pearl
River Delta region to add $1 billion in profit before tax in the
next five years, and generate annual profit before tax of $500
million subsequently.
HSBC Qianhai Securities Ltd. is expected to provide a positive
return on equity in five years, Mr. Gulliver said during the
joint-venture's launch Thursday, but declined to provide
figures.
HSBC was the first foreign bank to win approval to operate a
majority-owned joint-venture securities company in China. It did so
under a special arrangement for Hong Kong-funded financial
institutions. Last month, however, Chinese authorities said all
foreign companies would be allowed to hold majority stakes in
Chinese securities firms, a move long awaited by Wall Street.
Mr. Gulliver brushed off suggestions of emerging competition
from Western banks, saying HSBC has a head start in getting its
joint venture off the ground and hiring staff.
--Joanne Chiu in Hong Kong contributed to this article.
Write to Julie Steinberg at julie.steinberg@wsj.com
(END) Dow Jones Newswires
December 08, 2017 02:47 ET (07:47 GMT)
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