In an effort to shed its non-core assets and improve
efficiency, HSBC Insurance (Singapore) Pte Limited - an
indirectly fully-owned subsidiary of
HSBC Holdings plc
) - has entered into a deal to sell Singaporean group term life
insurance and group medical insurance operations. AXA Life
Insurance Singapore Private Limited will be buying these
businesses worth nearly S$23.5 million ($19.3 million) as of Dec
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The deal is still subject to regulatory approvals as well as
other customary closing conditions. HSBC stated that the
transaction is expected to be closed by the end of 2013.
Concurrently, a new 10-year bancassurance agreement has been
entered into by The Hongkong and Shanghai Banking Corporation
Limited, an indirectly fully-owned subsidiary of HSBC. As per the
bancassurance agreements, AXA Asia SAS and AXA General Insurance
Hong Kong Limited will become the sole providers of group term
life and group medical insurance products to retail and
commercial banking clients in Singapore. Further, both these
companies will be paying commissions on product sales to HSBC.
The aforesaid agreements are a part of HSBC's long-term strategy
to revamp its operations for stabilizing the capital levels and
improve efficiency. Since 2011, the company has been resorting to
aggressive restructuring, having sold more than 45 non-core or
unprofitable assets globally.
The sale of the insurance operations in Singapore will not only
bring long-term benefits for HSBC, but also help the company
concentrate on its emerging market strategy. Moreover, we expect
HSBC to continue with such strategic sale of businesses, thereby
enhancing its capital strength, going forward.
Apart from HSCB, many European banks including
Deutsche Bank AG
Credit Suisse Group
ING Groep NV
) have been divesting non-core assets and eliminating jobs to
reinforce profits over the past couple of years.
Currently, HSBC carries a Zacks Rank #3 (Hold).