China's CDB wavers in support of HSBC sale of Ping An stake-sources

BEIJING/HONG KONG Tue Jan 8, 2013 12:34am EST

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BEIJING/HONG KONG Jan 8 (Reuters) - State-run China Development Bank (CDB) has expressed concern over the funding behind the effort of Thai conglomerate CP Group to buy HSBC's stake in Ping An Insurance, sources told Reuters, a stance that may scupper the $9.4 billion deal.

HSBC Holdings Plc sold its 15.6 percent stake in Ping An Insurance (Group) Co of China Ltd to CP for HK$59 per share, saying in a Dec. 5 statement that the sale would be completed in two stages.

About one-fifth of the holding was to be transferred to the Thai buyer on Dec. 7. The rest of the purchase is backed by the Hong Kong branch of China Development Bank, and is subject to approval by the China Insurance Regulatory Commission (CIRC), HSBC said at the time.

"Indeed, there are some problems," said one of the sources, referring to CDB's role in the sale. The source was not authorised to speak publicly on the matter.

CP could not immediately be reached for comment, while HSBC and Ping An declined to comment.

Late last month, media reports in China and Hong Kong said the first CP payment came from funding sources not directly tied to the Thai conglomerate.

The South China Morning Post said on Tuesday that CDB is reconsidering its decision to back the CP-Ping An deal, citing people familiar with the situation.

CDB's concern stems from the various media reports that trace CP's first payment for the deal to outside sources, the Post reported.

Should CDB's concern prompt the lender to withdraw from funding CP's second payment, that would be a huge blow to the deal given the size of the transaction.

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