The name of Chinese insurance major Ping An 2318.HK +0.88% translates as safe. HSBC's HSBA.LN +1.03% sale of its multibillion stake in the company looks anything but.
Thai agricultural conglomerate Charoen Pokphand Group agreed last month to buy HSBC's 15.6% stake in Pingan for about $9.4 billion. That deal now appears to be floundering with policy lender China Development Bank apparently getting cold feet about funding part of the purchase.
If the deal falls through, everyone has egg on their face.
HSBC stood to make upward of $7.5 billion in profit over what it paid for the Ping An stake. The proceeds could come in handy to cover a $1.9 billion fine for breaking U.S. anti-money laundering rules. Offloading the Ping An shares also helped in light of Basel III capital rules that make holding shares in other financials tougher.
The big question mark now is whether HSBC will be able to find another buyer for such a large transaction. A $9.4 billion price tag is hardly chicken feed. After a highly public failure, and with concerns about government interference in any future deal, HSBC might find itself in a buyers' market.
Ping An doesn't look much better. Its shares are trading up 15.8% from the price at which HSBC agreed to sell to CP Group. But the stock fell 2.9% on Tuesday. If the deal falls through, HSBC's unsold stake will weigh on Ping An's valuation. CP Group also takes a reputational hit.
China's financial system also takes a blow. Uncertainty about why the deal has foundered, and the role played by state-owned China Development Bank, add to the impression that the markets are not pingan.
Thai agricultural conglomerate Charoen Pokphand Group agreed last month to buy HSBC's 15.6% stake in Pingan for about $9.4 billion. That deal now appears to be floundering with policy lender China Development Bank apparently getting cold feet about funding part of the purchase.
If the deal falls through, everyone has egg on their face.
HSBC stood to make upward of $7.5 billion in profit over what it paid for the Ping An stake. The proceeds could come in handy to cover a $1.9 billion fine for breaking U.S. anti-money laundering rules. Offloading the Ping An shares also helped in light of Basel III capital rules that make holding shares in other financials tougher.
The big question mark now is whether HSBC will be able to find another buyer for such a large transaction. A $9.4 billion price tag is hardly chicken feed. After a highly public failure, and with concerns about government interference in any future deal, HSBC might find itself in a buyers' market.
Ping An doesn't look much better. Its shares are trading up 15.8% from the price at which HSBC agreed to sell to CP Group. But the stock fell 2.9% on Tuesday. If the deal falls through, HSBC's unsold stake will weigh on Ping An's valuation. CP Group also takes a reputational hit.
China's financial system also takes a blow. Uncertainty about why the deal has foundered, and the role played by state-owned China Development Bank, add to the impression that the markets are not pingan.
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