HSBC sells Singapore insurance unit to Germany’s Allianz

SINGAPORE, HONG KONG, TOKYO, BENGALURU: HSBC has agreed to sell its Singapore life and health insurance business to Germany’s Allianz in a deal valuing the unit at SUSD2.7 billion (USD2.09 billion), the companies said on Friday.

The disposal is expected to generate a pre-tax gain of USD1.8 billion and boost HSBC Group’s common equity tier 1 ratio by up to 15 basis points, the bank said.

The sale marks another step in HSBC CEO Georges Elhedery’s drive to simplify Europe’s largest bank and redeploy capital into businesses and markets offering stronger returns, while preserving Singapore as a key wealth and wholesale banking hub.

The transaction also presents Allianz with a rare opportunity to expand in Singapore, a wealthy and tightly regulated market where distribution networks and bancassurance partnerships are highly valued. “This transaction reinforces our confidence in Singapore… HSBC Life Singapore has built a fast-growing business that is trusted by customers and partners, underpinned by deep local expertise,” Regional CEO of Allianz Asia Pacific, Anusha Thavarajah, said. Following the planned divestment in early 2027, HSBC will enter into a 15-year bancassurance distribution agreement with Allianz to sell insurance products in Singapore, backed by an upfront SUSD200 million payment.

HSBC disclosed in May that a review of HSBC Life Singapore’s insurance manufacturing business was under way. The deal comes as HSBC expands its broader insurance business. Insurance income rose 16percent year-on-year in the first quarter, helping drive an 18percent increase in quarterly wealth revenue, even as the bank continues to reshape its global footprint and focus on core Asian wealth and corporate banking markets. HSBC Holdings bought French insurer Axa’s Singapore assets for USD529 million in 2022.

Global banks have been pruning smaller or less scalable retail and insurance operations in parts of Asia, even as they compete aggressively for affluent clients in the region.

The sale comes months after Singapore’s Overseas-Chinese Banking Corp said in May that its Indonesian unit would acquire certain assets and liabilities of HSBC’s wealth and premier banking portfolio in Indonesia. HSBC is also reviewing its retail business in Turkey, Australia and Egypt.