(Adds details and background)
* Latest in HSBC's efforts to shed non-core assets
* Another Japanese investment in Vietnam's financial sector
By Taiga Uranaka
TOKYO, Dec 20 Sumitomo Life Insurance Co
said on Thursday it is buying HSBC Holding's
18 percent stake in Vietnamese insurer Baoviet
Holdings for about $340 million, the latest Japanese
acquisition in Southeast Asia.
Faced with weak growth prospects at home and a strong yen,
Japanese banks and insurers are stepping up overseas expansion.
For Sumitomo Life, the deal represents success after an
earlier setback. It had tied up with Vietnam Bank for
Agriculture and Rural Development (Agribank) with the intention
of setting up a life insurance joint venture in the country.
But the plan was shelved last year, prompting the Japanese
company to seek a new partner.
For HSBC, the deal marks further progress on Chief Executive
Stuart Gulliver's plan to exit non-core businesses. Earlier this
month the bank sold a minority stake in China's Ping An
Insurance. HSBC also sold its general
insurance business to French insurer Axa and
Australia's QBE Insurance Group Ltd earlier this year.
HSBC paid $360 million to buy the 18 percent stake in
Baoviet in two tranches in 2007 and 2009.
Sumitomo Life, one of Japan's top four life insurers, said
it will acquire the stake for about 7.1 trillion Vietnam dong
($340.3 million). The transaction is subject to regulators'
Last week, a source with knowledge of the matter said
Japan's biggest bank, Mitsubishi UFJ Financial Group Inc
, plans to buy 20 percent of VietinBank from
the Vietnamese government for about $720 million.
Japanese insurers are attracted to the growth potential of
Southeast Asian markets as life insurance markets are currently
very small. Vietnam's market was worth just $818 million in 2011
in terms of premiums, compared with Japan's $524.7 billion that
year, according to Swiss Re's Sigma Report.
Vietnam's life insurance penetration rate, a measure of how
much a country's population spends on life insurance, was just
0.7 percent in 2011, compared with 8.8 percent in Japan and 3.6
percent in the United States, according to Swiss Re.
Reuters this month reported that Japan's Dai-ichi Life
Insurance Co Ltd and Fukoku Mutual Life Insurance Co
were among companies shortlisted to buy a minority stake in
Indonesia's Panin Life for about $200 million.
(Reporting by Taiga Uranaka; Editing by Muralikumar
Anantharaman and Elaine Hardcastle)