HSBC asset sale continues with Bank of Shanghai exit
Banking giant could make up to US$700m profit from sale of 8pc stake to Banco Santander
HSBC Group's sale of its entire stake in Bank of Shanghai marks the banking giant's latest effort to boost liquidity amid tougher capital requirements under the Basel III banking regulations and trim what it calls "non-core" assets.
Europe's biggest bank said yesterday that it has agreed to sell its entire 8 per cent stake in the Shanghai-based lender to Spain's largest bank, Banco Santander. The deal is expected to be completed in the first half of next year. Both parties refused to disclose the details of the deal.
HSBC first bought a stake of 24 million shares in Bank of Shanghai for US$63 million in 2001. In 2010 it paid another US$44 million for another 24 million shares, said HSBC spokesman Gareth Hewett.
The bank valued the stake at US$468 million on its balance sheet in September.
Analysts said the final price could reach US$800 million, as Bank of Shanghai's market capitalisation is expected to stand at around US$10 billion following its initial public offering in Hong Kong. That would mean the deal could net HSBC about US$700 million, much less than the US$2.6 billion it made by selling down its entire stake in Ping An Insurance in April.
"For HSBC this is a very small asset. But it reflects exactly what the bank has been doing over the past three years - selling non-core assets and preserving capital," said Jim Antos, a banking analyst at Mizuho Securities Asia.