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China's biggest insurer Ping An boosts HSBC stake with US$39.4 million purchase amid stock sell-off

Pearl Liu and Enoch Yiu pearl.liu@scmp.com, enoch.yiu@scmp.com
·3 mins read

Ping An Insurance (Group) has raised its stake in struggling UK lender HSBC Holdings by picking up additional shares from the open market just as they slumped to the lowest in more than two decades amid loan losses and concerns over its business dealings.

The Shenzhen-based insurer, the world's largest by market value, bought 10.8 million shares in the bank at an average price of HK$28.2859 per share, according to a September 25 filing. That works out to about HK$305.5 million (US$39.4 million) in outlay. The highest cost was HK$28.80 per share.

The purchase, made through its investment management unit Ping An Asset Management, lifted its ownership to 8 per cent from 7.95 per cent. A separate filing on September 27 listed BlackRock Inc, the world's biggest asset manager, as holding a 7.14 per cent stake in the British banking group.

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"All we have said previously is HSBC is a long-term investment," a Ping An spokesman said when contacted by phone on Sunday. He declined to comment further on the stock purchase.

Ping An's headquarters in Shenzhen is the fourth tallest building in the world. Photo: Andy Yeung alt=Ping An's headquarters in Shenzhen is the fourth tallest building in the world. Photo: Andy Yeung

HSBC slumped to as low as HK$27.50 on Thursday, a level not seen since May 1995. It ended last week with an 8.9 per cent loss, bringing the slide this year to 53.7 per cent and erasing about HK$643 billion in its market value.

The sell-off was triggered by concerns it could be penalised by Chinese authorities over its role in assisting the US investigations into Huawei Technologies, according to a local media report. A report released by the International Consortium of Investigative Journalists also named HSBC and other lenders linked to potential money laundering acts.

Several of the banks cited in the stories, including HSBC and Standard Chartered, previously paid billions of dollars in fines and agreed to deferred prosecution agreements in the past decade over failures in their anti-money-laundering programmes.

HSBC and Standard Chartered both declined to comment last week on individual clients, but said they have spent substantial amounts in recent years to improve their compliance programmes.

HSBC boosts bad loan provisions, sees second-quarter profit plunge as coronavirus crushes economies

The Hong Kong-listed insurer began buying shares in the bank in 2016 as part of its insurance investments, building the stake beyond the 5 per cent threshold in December 2017, after which it had to publicly disclose its holding and changes.

HSBC has come under tremendous strain following the outbreak of Covid-19 since earlier this year, complicating its efforts to trim jobs, bonuses and dividends and provisions for higher loan losses as Hong Kong's economy slipped into its worst recession on record.

HSBC, which counts the Chinese city as one of its biggest markets in Asia, has been facing mounting pressure in recent months from lawmakers in the US and UK, who are critical of Beijing's imposition of national security law in Hong Kong.

Senior UK and US politicians have criticised HSBC and Standard Chartered after they backed the controversial law.

Additional reporting by Reuters

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.