Chinese regulators were ready to reject the $9.4 billion bid from Thai conglomerate Charoen Pokphand Group over concerns about funding for the bid, according to Hong Kong's the South China Morning Post.

State-owned China Development Bank, which had agreed to provide loans to help CP Group buy HSBC's 15.57 percent stake in Ping An, was reconsidering its decision, the newspaper said.

The China Insurance Regulatory Commission (CIRC) was therefore worried about where the money would come from and whether the Thai firm would be the real buyer of the stake, the Post reported, citing sources close to the regulator.

In Shanghai Wednesday, Ping An Insurance closed down 0.86 percent at 45.07 yuan. On Tuesday, it lost 3.73 percent.

In Hong Kong, Ping An gained 0.88 percent to HK$68.75 after falling 4.0 percent the previous day. HSBC lost 0.12 percent to HK$82.65.

"This transaction is undergoing the normal approval process. We have no further need to disclose information," Ping An said in a statement.

HSBC and the China Development Bank both declined to comment, while the CIRC could not be reached.

The collapse of the deal would be a big blow to Britain-based HSBC, which has been selling its non-core assets as part of a broad restructuring plan designed to boost profitability.

London and Hong Kong-listed HSBC is also setting aside hundreds of millions of dollars as provision for fines related to possible criminal charges over money-laundering allegations in the United States.

When the deal was announced December 5, HSBC said it would sell its 15.57 percent holding in Ping An at HK$59 a share, making it the biggest foreign purchase by a Thai firm.

Ping An had hit the headlines after the New York Times said in reports in October and November that Chinese Premier Wen Jiabao's relatives benefited ahead of its 2004 Hong Kong listing by buying stock at a discount.

The insurer has denied those claims and threatened legal action against the newspaper.