Exclusive: deal for HSBC's Ping An stake to be rejected

Mainland regulators are poised to reject a US$9.4 billion bid by a Thai conglomerate to purchase HSBC's entire stake in Ping An Insurance.

The refusal by the China Insurance Regulatory Commission (CIRC) is expected because of concerns about the funding for the bid and the identity of the real buyer. If the deal collapses, it would be a huge disappointment for HSBC.

Europe's biggest bank by assets is keen to raise cash to boost its capital base and to pay a US$1.92 billion settlement agreed upon last month to end a US money-laundering probe.

Sources close to the CIRC told the South China Morning Post yesterday that senior officials were not convinced Thailand's Charoen Pokphand Group (CP) could afford to buy HSBC's 15.6 per cent holding in Ping An Insurance - China's No2 life insurer - mostly with its own money. HSBC and Ping An declined to comment and CP was not available for comment.

The CIRC is also increasingly concerned about whether CP would be the real buyer and ultimate holder of the Ping An stake, said the sources, who declined to be identified owing to the sensitive nature of the matter.

"If CP is serious about the deal, it should do more to explain where and how it will get the money and who else, if not China Development Bank (CDB), is helping it make the deal," one of the sources said. "Otherwise, just forget it."

The Post reported yesterday that CDB, a major state-owned bank, was reconsidering its decision to back the deal, a signal CP's bid might be in trouble. When HSBC first said it planned to allow CP to buy its Ping An stake, CDB agreed to provide loans to help CP close the deal.