HSBC has agreed to sell its Singapore life and insurance business to Allianz for 2.7 billion Singapore dollars (£1.6 billion) amid an ongoing overhaul by chief executive Georges Elhedery.
Under the deal, HSBC and Allianz will form a 15-year distribution agreement that will see HSBC continue to sell insurance products to its customers in Singapore.
HSBC said the sale will deliver a pre-tax gain of around 1.8 billion US dollars (£1.4 billion) and boost its balance sheet strength, with a 200 million dollar (£150.1 million) initial cash lump sum also payable as part of the distribution agreement.
It expects the deal to complete in the first half of next year.
The sale follows a strategic review of HSBC Life in Singapore, but London-listed HSBC stressed it remains “committed to Singapore as an international wealth and wholesale banking hub”.
“Singapore is crucial to HSBC’s strategy and is a key focus of investment and growth for the group,” HSBC said.
The move is the latest made by boss Mr Elhedery, who has been restructuring the lender over the past two years.
He has already closed parts of HSBC’s investment banking business across the UK, Europe and the US and exited some markets.
He continues to slash costs across the group and said in May the group was set to meet a target for 1.5 billion dollars (£1.1 billion) in annual savings by June, which is six months earlier than planned.
HSBC said on Friday: “The transaction forms part of the ongoing simplification of the HSBC Group as it focuses on increasing leadership and market share in the areas where it has a clear competitive advantage and the greatest opportunities to grow and support its clients.”
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