Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

HSBC has proved a canny seller of Chinese assets. The emerging market lender announced on Dec. 5 it had sold 16 per cent of Ping An at a premium to the market price. That's impressive: Rivals Bank of America and Goldman Sachs accepted discounts when offloading their Chinese bank shareholdings. The positive reaction should buy HSBC some time to explain its broader China strategy.

HSBC's decision to sell was not surprising. Chief executive Stuart Gulliver has been pulling the bank out of the insurance business. There was a huge profit to be captured too: HSBC's investment cost just $1.6-billion (U.S.), compared with the selling price of $9.4-billion.

But finding a buyer palatable to the Chinese authorities, who need to approve the deal, can not have been simple. Charoen Pokhpand, a company controlled by Dhanin Chearavanont, Thailand's richest man, is a far from an obvious choice – its main business is agriculture. But as a big player in China, it has cash flows that should help finance the China Development Bank loan it is using to part-finance the purchase.

Story continues below advertisement

This allowed HSBC to strike a deal at $59 Hong Kong ($7.55) per share, a premium to Ping An's closing price the day before HSBC first announced it was considering a sale. By contrast, Bank of America sold a big chunk of its shares in China Construction Bank 11 per cent below the market price. In April, Goldman Sachs sold a 4-per-cent stake in ICBC to Singapore's Temasek at a 3-per-cent discount.

The accounting gain from the sale, which will add 50 basis points to HSBC's already-strong core Tier 1 capital ratio, should buy the bank some time to explain its China strategy, including the benefits of its 20-per-cent stake in Bank of Communications, which it has committed to keep.

There may even be another benefit: Selling out of Ping An, which also has a securities arm, may give HSBC a renewed opportunity to pursue its own securities licence in China, something most of its rivals attained long ago. The bank will now have to prove it can be an equally good buyer as it is a seller.

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies