HSBC increases stake in Vietnam’s largest insurance and financial services group

Following regulatory and shareholder approvals, HSBC Insurance (Asia-Pacific) Holdings Limited (HSBC) has increased its shareholding in Bao Viet Holdings to 18 per cent from 10 per cent through the purchase of 53,682,474 new shares for a consideration of VND1.88 trillion (approximately US$101.8 million).


HSBC acquired a 10 per cent interest in Bao Viet, Vietnam’s leading insurance and financial services group, in September 2007. Under the terms of the original agreement, HSBC had an option to purchase a further eight per cent of Bao Viet shares from the Ministry of Finance (MoF). In October 2009 the MoF gave formal consent for this option to be exercised through the issue of new Bao Viet shares to HSBC.

Sandy Flockhart, Chief Executive Officer of The Hongkong and Shanghai Banking Corporation Limited, said: “The decision to increase our stake in Vietnam’s leading insurance and financial services group is reflective of our confidence in the long-term growth of both Bao Viet and Vietnam. In line with our strategy, we continue to focus on emerging market opportunities and to provide insurance, wealth protection and wealth management services across Asia-Pacific.”

David Fried, Chairman and Chief Executive Officer of HSBC Insurance for Asia- Pacific, said: “With an insurance penetration of only 1.4 per cent of GDP, the potential for growth in Vietnam is significant. We remain committed to investing in Vietnam’s development and see the country as a key market within the Asia-Pacific region.”

As part of the original agreement, HSBC continues to hold certain pre-emptive rights to acquire shares currently owned by the MoF with a maximum HSBC shareholding of 25 per cent within the first five years of the agreement and prevailing foreign ownership limits thereafter.

With a population of 87 million, a quarter of which is under the age of 15, Vietnam is one of the few economies that has continued to see resilient GDP growth throughout the financial crisis. Over the past few years, the government has introduced supportive measures to liberalise Vietnam’s financial markets and HSBC has correspondingly strengthened its presence and investments in the country.

In addition to its strategic investment in Bao Viet, HSBC also holds a 20 per cent stake in Vietnam Technological and Commercial Joint Stock Bank (Techcombank). HSBC also locally incorporated its Vietnam operations in January 2009, and subsequently expanded its distribution network from two branches and one representative office to 10 outlets currently. It has also partnered with Vietnam Posts Corporation to provide access to HSBC banking services for customers at more than 1,600 post offices across the country.