Hong Kong and Shanghai Banking Corporation (HSBC) Insurance paid VND4.1 trillion (US$225 million) on September 13 to buy 10 per cent stake in Vietnam’s leading insurer Bao Viet, becoming its sole foreign strategic partner, state media said today.
Growth potential in insurance sector in Vietnam with 85 million people is huge as Vietnam spent about US$10 per head on insurance in 2005, compared with US$46.3 in China.
“Bao Viet, with a wide network in the country and a famous brand name, is ideal for HSBC to exploit the Vietnam’s burgeoning insurance market,” said HSBC Insurance chairman David Fried.
HSBC will offer the Vietnamese company technical assistance and employee training to further enhance its insurance capacity on the path of becoming a regional financial group. The cooperation will also complement HSBC’s growing presence in financial sector in Vietnam, HSBC Holding general director Clive Bannister said.
The global banking corporation bought Bao Viet shares at VND72,000, holding total 57.3 million shares in the non-life insurer in five years.
However, the row between Knight Vinke and HSBC escalated recently after the activist investor launched a scathing attack on the bank’s latest overseas expansion.
Knight Vinke said that the deal would “do nothing to add shareholder value”. It was another example of HSBC’s failed strategy of building “a portfolio of standalone businesses that cannot be integrated into a coherent whole”, the fund manager said.
Eric Knight, head of Knight Vinke, last Thursday launched an assault on HSBC, criticising the bank’s remuneration policy and its move away from emerging markets. He called for an independent review of HSBC strategy.
The state-run insurer also signed a contract valued VND1.5 trillion (US$90 million) to sell its 3.56 per cent stake to Vietnam National Shipping Lines (Vinashin), the corporation’s domestic strategic partner.
Bao Viet, which has a registered capital VND9.1 trillion (US$570.3 million), is now the largest insurer in Vietnam, holding 35.2 per cent of insurance market share.
Deputy Minister of Finance Tran Xuan Ha felt pleased with Bao Viet’s strategic partner as they will help Bao Viet raise financial capacity to remain the leading position in insurance market.
The French AXA insurer has recently decided to buy 16.6 per cent stake in the Vietnam’s second largest non-life insurer, Bao Minh Corporation, to expand their operation in the growing financial market of Vietnam. (Vietnamnet, Labor)
Vietnamese
