AIG to sell HK consumer finance, India IT units

By Samuel Shen and Sumeet Chatterjee

SHANGHAI/BANGALORE (Reuters) - American International Group (AIG.N) has struck deals to sell its Hong Kong consumer finance and India-based IT services units, taking two small steps in its bid to raise cash to repay more than $80 billion in bailout loans.

China Construction Bank (CCB) Asia (0939.HK), the country's second-biggest lender, will buy 100 percent of AIG Finance (Hong Kong) Ltd for $70 million in cash. The deal also includes repayment of intragroup indebtedness and deposits of about $557 million, the two companies said on Wednesday.

AIG, once the world's largest insurer, is winding down some units and selling others to cut risky investments to gain stability and pay down its debt after being rescued by the U.S. government during the height of the credit crisis last year.

The company reported its first net profit in seven quarters last week, and its shares have doubled in value this month. The stock rose nearly 5 percent on Wednesday.

New York-based AIG said on Tuesday that its financial products unit had completed the sale of its energy and infrastructure investment assets, for net proceeds of about $1.9 billion.

While a help, sales to date have made only a small dent in AIG's federal debt, raising concerns that it will still be a long time before taxpayers are made whole.

On Friday, AIG said that during the first six months of the year, it had sold assets for net proceeds of about $2.6 billion that it can use to repay its federal loans.

To help spur bigger sales, AIG has tweaked its divestiture plans for some of its larger businesses. In recent months it stepped up plans to list its Asian insurance unit, American International Assurance Co Ltd (AIA), in Hong Kong after failing to find a buyer for a large stake in it earlier this year.

It is pursuing a similar path for its global property-casualty division. The company is still seeking buyers for its Taiwan unit, Nan Shan Life.

Buying AIG Finance would help CCB to expand in Hong Kong by significantly increasing the customer base as well as market share in the consumer banking market, the Chinese lender said.

AIG Finance, which sells credit cards and operates as a restricted license bank, has more than 500,000 customers and employs about 350 people.

Chinese banks including CCB, China Merchants Bank (600036.SS) (3968.HK) and Industrial and Commercial Bank of China (ICBC) (1398.HK) (601398.SS) are expanding abroad as western rivals shrink overseas operations due to the global financial crisis.

INDIA IT SERVICES UNIT

Separately, AIG will sell its Indian IT services arm to local outsourcing company MphasiS Ltd (MBFL.BO) for an undisclosed amount.

AIG Systems Solutions Ltd, which provides IT services to AIG firms globally, has more than 800 staff at its facilities in Indian cities of Chennai and Kolkata, said MphasiS, which is owned by Hewlett-Packard's (HPQ.N) Electronic Data Systems Corp unit.