HSBC said on Monday it had agreed to acquire Axa’s insurance assets in Singapore for $575 million, part of its broader strategy of scaling up its wealth management business in Asia and boosting fee income.
The bank said in February it would invest $3.5 billion in its wealth and personal banking business in Asia, while shifting assets away from some less-profitable business lines in Europe and North America.
It is also trying to generate a greater more revenue from fees it earns from selling products to customers, as it struggles with lending in a low interest rate environment.
“This is an important acquisition that demonstrates our ambition to grow our wealth business across Asia. Wealth is one of our highest growth and highest return opportunities, and plays to our strengths as an Asia-centred bank with global reach,” Noel Quinn, Group Chief Executive of HSBC Holdings, said in a statement.
Axa said in a statement that the deal was subject to regulatory approvals and would probably close by the fourth quarter of this year.
Axa Singapore had net assets of $474 million, annualized new premiums of $85 million and gross written premiums of $739 million.
HSBC said the combined business would be the seventh-largest life insurer and the fourth-largest retail health insurer, with over 600,000 policies in-force covering life, health and property and casualty insurance.
The sale is part of Axa’s moves to streamline its business in a restructuring launched by Chief Executive Thomas Buberl, a process that includes selling assets in some countries and markets to boost returns.
Quinn said last month HSBC was looking at three or four “bolt on” acquisitions in Asia outside China in areas including insurance and asset management, while it would focus on organic growth in Hong Kong and mainland China.
HSBC sold out of retail banking in the U.S. and France in May and June respectively, incurring a loss of about $2.3 billion on French sale.
Reuters