ref="http://www.cityam.com/company/hsbc-holdings">HSBC has agreed to sell its general insurance businesses to French insurer AXA Group and Australia's QBE Insurance Group for £581m in cash, as Europe's biggest bank moves ahead with its plan to divest non-core assets.
The deal, the latest in a series of cost cutting initiatives under new HSBC CEO Stuart Gulliver, includes 10-year bancassurance agreements with AXA and QBE.
The agreements will earn commissions and profit-related payments for HSBC on top of the cash value of the deal.
HSBC's decision to exit the business could be a precursor to similar deals as lenders globally consider selling capital-intensive businesses as reserve requirements become more strict.
"We expect rising capitalisation requirements across the banking and insurance sectors to continue to drive portfolio re-balancing, with some banks in particular reflecting on the value of manufacturing and/or distributing non-life insurance going forward," said Ron Kozlowski, director of Towers Watson's general insurance consulting business in Asia Pacific.
For AXA, the acquisition is a step forward in its effort to boost emerging markets presence and potentially help Europe's No. 2 insurer to achieve its 2015 targets ahead of time.