By Selena Li, Sneha Kumar and Yantoultra Ngui
July 24 (Reuters) - HSBC has agreed to sell its life and health insurance business in Singapore to Allianz for S$2.7 billion ($2.1 billion), as it trims non-core operations and focuses on its Asian wealth and wholesale banking operations.
The global bank will move to a capital-light bancassurance model in Singapore, allowing it to generate fee income without carrying capital reserves or maintaining underwriting books, in line with its long-term goal of
being a leaner wealth manager.
For Germany's Allianz, the deal offers a second chance to expand in Singapore after it withdrew an offer in 2024 to buy at least 51% of Income Insurance, formerly NTUC Income, following public concern and government intervention.
HSBC said the deal will generate a pre-tax gain of $1.8 billion and boost its common equity tier 1 ratio by as much as 15 basis points.
The bank's Hong Kong-listed shares were down 1.1% in morning trade, in line with the wider market.
The sale is another step in CEO Georges Elhedery's drive to simplify Europe's largest bank and redeploy capital to businesses and markets offering stronger returns, while preserving Singapore as a wealth and wholesale banking hub.
"HSBC's sale of the Singapore insurance business is expected to enhance the capital positions of the bank with a higher CET1 ratio," said senior research analyst Ralph Chen at S&P Global Market Intelligence, referring to a measure of financial strength.
The added capital could give HSBC room to resume share buybacks, pay a special dividend or invest in faster-growing areas such as private credit, Chen said.
HSBC did not disclose plans for the sale proceeds.
Under the deal, to be finalised in the first half of 2027, HSBC will sell Allianz's insurance products in Singapore for at least 15 years, backed by an upfront payment of S$200 million.
Insurers prize such bank distribution deals in one of Asia's biggest wealth centres because of the access they provide to a large number of affluent clients.
ALLIANZ IN ASIA
Allianz has been present in Asia for more than a century and runs insurance operating entities in eight markets, including China and Indonesia. It serves about 9 million customers in the region across life, health, property and casualty insurance.
"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," said Regional CEO of Allianz Asia Pacific Anusha Thavarajah.
HSBC in May said it was reviewing HSBC Life Singapore's insurance "manufacturing" business. It had purchased French insurer AXA's Singapore business for $529 million in 2022.
Global banks have been pruning smaller or less scalable retail and insurance operations in parts of Asia, even as they compete for affluent clients in the region.
In May, Oversea-Chinese Banking Corp said its Indonesian unit would acquire certain assets and liabilities of HSBC's wealth and premier banking portfolio in Indonesia.
HSBC has also said it is reviewing its retail business in Turkey, Australia and Egypt.
($1 = 1.2923 Singapore dollars)
(Reporting by Sneha Kumar, Yantoultra Ngui in Singapore, Selena Li and Kane Wu in Hong Kong, Anton Bridge in Tokyo and Kumar Tanishk in Bengaluru; Editing by Joyjeet Das, Shailesh Kuber, Sherry Jacob-Phillips and Christopher Cushing)
