HSBC’s major shareholder Ping An exploring ways to cut $17.9 billion stake, sources say

SHANGHAI - Ping An Insurance Group is weighing options that would allow it to reduce its 8 per cent stake in HSBC Holdings, according to people familiar with the matter.

One option an internal team at the Chinese insurance giant is considering is further share sales, similar to the US$50 million sale it disclosed last week, as it seeks to reduce its US$13.3 billion (S$17.9 billion) position in Europe’s largest lender, the people said.

A sovereign wealth fund or ultra-rich investor in the Middle East taking a sizeable stake is another possibility, some of the people said. It is unclear whether there have yet been formal talks about a larger sale of the stake and how feasible it would be, although members of the insurer’s board are currently visiting the Gulf, two of the people said.

The openness to reducing its stake reflects Ping An’s desire to lock in some profits from its investment and a recognition that the more dramatic changes it has pushed for at HSBC stand little chance of succeeding for now.

HSBC shares have risen about 15 per cent in the past year in London, and earlier in May, hit their highest level since 2018. They fell 0.7 per cent on May 16, after reversing earlier gains.

A representative for Ping An Asset Management, the firm’s investment unit, declined to comment. HSBC declined to comment.

Ping An has had a contentious relationship with HSBC in recent years as it campaigned for the bank to embark on a series of reforms, including spinning off its Asian arm. Those efforts were largely defeated at a meeting of the bank’s shareholders in 2023.

In May, the insurer lodged a futile protest vote against chief executive Noel Quinn at the company’s annual shareholder meeting, just days after he surprised the business world with the announcement that he would retire from the lender.

HSBC is now leaning towards appointing its next CEO from a short­list of internal candidates, including chief financial officer Georges Elhedery and Nuno Matos, head of wealth and personal banking, accord­ing to a Bloomberg News report­ this week.

During the insurer’s ownership of the stake, HSBC has had four CEOs­ who have all had to navigate the deterioration of ties between China and the US.

Asset managers are increasingly looking to sidestep those tensions as they make new investments. Singapore’s Temasek, a major investor in HSBC’s rival Standard Chartered Bank, has said it will

focus on investing in companies with large, domestic-focused businesses

as it seeks to avoid those risks.

In May, Ping An’s asset management arm sold US$50 million of HSBC shares, decreasing the insurer’s stake in HSBC from 8.01 per cent to 7.98 per cent. It was the first time Ping An disclosed that it has disposed of shares since the company began its campaign against the bank.

Ping An emerged as a major shareholder in HSBC in 2017. In September 2020, the company scooped up 10.8 million shares of HSBC at an average cost of HK$28.2859 apiece. At the time, the lender’s shares were under pressure because it was participating in a US probe of Huawei.

The firm’s stock has soared since then as investors cheered Mr Quinn’s efforts to shed non-core assets and boost returns. BLOOMBERG