HSBC increases stake in Bao Viet Holdings

Following regulatory and shareholder approvals, HSBC Insurance (Asia-Pacific) announced it has increased its shareholding in Bao Viet Holdings to 18% from 10% at a cost of Vnd1.88 trillion ($102 million).

HSBC acquired a 10% 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 8% of Bao Viet's 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.

"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," said Sandy Flockhart, chief executive officer of HSBC, in a press release. "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."

"With an insurance penetration of only 1.4% 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," added David Fried, chairman and chief executive officer of HSBC Insurance in Asia-Pacific.

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% within the first five years of the agreement and prevailing foreign ownership limits thereafter. During 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% 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.