HSBC to Take Full Control of Chinese Life Insurance Venture

(Bloomberg) --

HSBC Holdings Plc agreed to buy the remaining 50% stake in its Chinese life insurance venture as Chief Executive Noel Quinn pushes forward with a business overhaul.

The lender will take full ownership of HSBC Life Insurance Company Ltd. after buying out its partner, The National Trust Ltd., according to an emailed statement. Financial details weren't disclosed.

“This transaction supports our ambition to accelerate growth within our Asian franchise, particularly in the dynamic and fast-growing Greater Bay Area, where we fully intend to expand in all lines of businesses,” said Quinn. “It also allows us to further extend our capabilities in wealth, another area of strategic focus for the group.”

Quinn is seeking to boost the performance of HSBC by shifting investments and capital to Asia and restructuring the business. China is this year further opening its vast $45 trillion financial markets to allow foreign companies to take full ownership in businesses spanning insurance, investment banking and fund management.

The Chinese insurance venture was formed in 2009 and is present in nine key mainland cities, including Shanghai, Beijing, Guangzhou, and Shenzhen.

The push fits well into the vision of HSBC Chairman Mark Tucker, who has formerly run AIA Group Ltd. and Prudential Plc. At a conference in Hong Kong in November, Tucker said the coming years will be a time of “great interest and opportunity” for the insurance sector with exciting prospects for the lender's insurance arm.

But it faces heady competition. Foreign joint ventures such as HSBC's brought in just 8% of the sector's premiums last year and also lagged the growth of domestic competitors, according to Fitch Ratings. Local firms have vast distribution networks and millions of agents, led by China Life Insurance Co. and Ping An Insurance (Group) Co.

Among foreign firms poised to expand their presence is German insurer Allianz SE, which late last year got approval to set up a entirely foreign-owned insurance holding company.

The transaction will be subject to regulatory approvals, including from the China Banking and Insurance Regulatory Commission.

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