HSBC to set up insurance company in China
Shanghai, June 7: HSBC Holdings Plc. said on Wednesday it planned to establish an insurance company in mainland China before year-end, seeking a fresh revenue source in the rapidly growing economy.
Peter Wong, executive director of Hongkong and Shanghai Banking Corp., HSBC's Asian unit, said the London-based lender was looking for a partner. He did not specify what form of insurance HSBC would enter.
''We plan to set up an insurance company and we are seeking partners,'' Wong told Reuters on the sidelines of a banking conference, adding that he expected the new company could be founded by the end of 2006.
Bank of Communications Co. Ltd. president Zhang Jianguo told Reuters in March that his bank the nation's fifth-largest lender, was planning to set up its own insurance company in China, but he declined to give a timeframe. HSBC bought 19.9 percent of Bank of Communications in 2004.
Asked if Bank of Communications might partner HSBC in the insurance business, Wong replied: ''I understand that BoComms hasn't been allowed to do life insurance business now, and we will have different ways at the beginning.'' HSBC has also invested in China's Ping An Insurance (Group) Co., taking a nearly 20 percent stake. Wong declined to comment on whether Ping An Insurance might become HSBC's partner.
China's insurance sector is expanding as Beijing dismantles a cradle-to-grave welfare system.
Life insurance premiums in China rose 14.2 percent to 364.62 billion yuan (.5 billion) in 2005, according to official data.
But less than 4 percent of China's 1.3 billion people have insurance.
Beijing is scheduled to open its banking sector wider to foreign competition by year-end, and HSBC already has one of the biggest foreign investor footprints in China. In addition to its stake in Bank of Communications, HSBC purchased 8 percent of Bank of Shanghai, a small lender, in December 2001.
The British bank opened a Shanghai-based asset-management joint venture this year, which has raised nearly 0 million for its first fund, launched in April. It is also keen to expand in China's brokerage business.
''We are in talks with more than three Chinese securities companies, but we also realise Chinese regulators have halted approval for new securities ventures recently,'' said Wong. He declined to name the companies.
Wong said his bank so far had no preference among the possible securities industry partners, and that HSBC would work with Bank of Communications on the issue, which might eventually lead to the creation of a new joint venture securities house.
Industry sources have told Reuters that HSBC, along with Bank of Communications, was among a field of foreign bidders -- including Credit Suisse and Citigroup -- vying for a stake in mid-sized Xiangcai Securities in late 2005.