Flush with Billions in Cash, Wonder If HSBC Might Look to Expand U.S. Operations?

[ by Howard Haykin ]

HSBC, Britain's largest bank, announced that it had finalized on Friday the sale of its entire 15.6% stake in the Ping An Insurance Group to a Thai investor, despite previous concerns about the buyer's financing.  The sale price was $9.4 billion.  The deal, which required approval from the China Insurance Regulatory Commission, reportedly had been blocked for several weeks by state-run China Development Bank over the CP Group's need to finance part of the deal.  It's unclear whether the China Development Bank helped finance the transaction.

Regardless, the CP Group, which is best known as an agricultural giant, made the final cash payment to HSBC ahead of the deadline, making it the largest shareholder in Ping An, a financial conglomerate with heavy ties to relatives of the Chinese prime minister, Wen Jiabao, and the relatives of former Chinese Central Bank chief, Dai Xianglong.  

Ping An,  long considered one of the strongest financial companies in China - with insurance, banking, brokerage and other financial arms - is already one of the world's most valuable companies.  But Ping An has also been dogged by controversy reaching back to its 2004 IPO in Hong Kong.  Corporate records show that a group of investors with ties to relatives of government officials bought a stake in the company prior to the IPO.  These individuals became instant billionaires, as a result of the transactions.

HSBC bought its first stake in Ping An in 2002 - well ahead of Ping An's I.P.O. and later increased its stake substantially.

So, now that HSBC has so much cash - $9.4 billion - wonder whether are considering using some of it to expand U.S. brokerage operations.

For further details, go to:  [ Dealbook, 2/1/13 ].