China's Ping An boosts stake in HSBC after historic plunge

[BEIJING] China's Ping An Insurance Group raised its stake in HSBC Holdings after the shares slumped to the lowest in a quarter of a century, giving support to the lender that's facing mounting difficulties on several fronts.

Ping An Asset Management, a unit of the insurer, revealed in an exchange filing that it last week bought 10.8 million shares of HSBC, bringing its stake to 8 per cent and cementing its place as the largest shareholder. Ping An purchased the shares at an average HK$28.2859 apiece. HSBC ended Friday at HK$28.20 (S$5).

HSBC's shares last week plunged to 25-year low in part on speculation its push into China could be thwarted. The ruling Communist Party's Global Times newspaper reported that the bank could be put on an "unreliable entity" list that aims to punish firms, organisations or individuals that damage national security.

Ping An said last week its holding is a "long-term financial investment". The Shenzhen-based company, which has owned a major stake in HSBC since late 2017, has seen the value of those shares tumble by at least US$8.6 billion over the past three years, according to data compiled by Bloomberg.

"Ping An is a long-term investor so the critical point is whether there are structural issues at the bank that go against the insurer's investment philosophy," said Steven Lam, Hong Kong-based insurance analyst at Bloomberg Intelligence.

HSBC was also among global banks named in a report by the International Consortium of Investigative Journalists (ICIJ) on lenders that "kept profiting from powerful and dangerous players" in the past two decades even after the US imposed penalties on the institutions.

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Facing difficulties in navigating low interest rates and surging loan losses sparked by the global pandemic, the bank's profit halved in the first half. HSBC chief executive officer Noel Quinn last month warned bad loans could swell to US$13 billion this year. Mr Quinn said the bank would attempt to hasten a shakeup of its global operations, accelerating a further pivot into Asia as its European operations lose money.

In response to the ICIJ report last week, the bank said that "starting in 2012, HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions. HSBC is a much safer institution than it was in 2012".

BLOOMBERG