HSBC sells stake in Korean insurer

Exit part of bank's three-year global plans to reduce, revive and refocus operations

PUBLISHED : Tuesday, 30 April, 2013, 12:00am
UPDATED : Tuesday, 30 April, 2013, 7:28am

HSBC said it sold an insurance stake in South Korea.

The banking giant said its subsidiary HSBC Insurance (Asia-Pacific) had agreed to sell its 50 per cent less one share in Hana HSBC Life Insurance to Hana Financial Group.

The lender did not disclose the sale price but at the end of last year, Hana HSBC Life had gross assets of about US$2.47 billion.

The transaction, which was expected to be completed as early as May 10, was in keeping with HSBC's group strategy, the lender said. The sale is part of a three-year revival plan by HSBC chief executive Stuart Gulliver to reduce costs, raise returns and refocus on profitable areas.

Gulliver wants to cut US$3.5 billion in annual costs and make the group more focused, and has been unwinding many deals and exiting countries and businesses where it is unprofitable or lacks critical mass.

HSBC remained committed to the Korean market and continued to invest in developing its Korean Global Banking and Markets business, the investment banking arm, HSBC said.

Foreign financial companies find it difficult to make a profit in Korea because of the culture of financial protectionism in the country. HSBC had tried to acquire a local retail banking business in Korea but failed to do so.

Standard Chartered, which beat HSBC and acquired Korea First Bank in April 2005, also faced difficulties when it tried to introduce changes in Korea First Bank's salary structure, triggering a strike.

HSBC last week announced plans for another round of staff cuts in Britain. A total of 1,149 jobs have been eliminated in the country.

The lender will post its first-quarter results on May 7.