Moody's reaction is mixed on bank play
By Zhang Fengming |
August 30, 2011, Tuesday
|
Print Edition
Print Edition
PING An Insurance's investment in Shenzhen Development Bank is negative for the insurance business but positive for the bank, according to rating agency Moody's.
In a research note yesterday, Moody's said Ping An's insurance subsidiaries are expected to issue debt to replenish their capital.
Ping An, China's second-biggest insurer, said earlier this month that it would subscribe to as much as 20 billion yuan (US$3 billion) of new shares in its partly-owned subsidiary, Shenzhen Development Bank, following the initial acquisition of a near 20 percent stake in the bank two years ago and an asset-restructuring plan last month that boosted the group's stake to over 52 percent.
The latest share subscription will take Ping An's ownership to as much as just more than 61 percent.
Sally Yim, senior credit officer at Moody's, said: "We view the transaction as credit negative for Ping An's insurance subsidiaries, as the additional investment in the bank and our expectation of further investment mean there will be fewer capital resources for the subsidiaries, namely Ping An Life Insurance and Ping An Property & Casualty Insurance. Both Ping An Life and Ping An P&C are growing very rapidly. As such, their need for capital equals that of Shenzhen Development Bank."
Ping An's investment in the bank is seen as part of its "three-pillar strategy" involving banking, insurance and asset management.
In a research note yesterday, Moody's said Ping An's insurance subsidiaries are expected to issue debt to replenish their capital.
Ping An, China's second-biggest insurer, said earlier this month that it would subscribe to as much as 20 billion yuan (US$3 billion) of new shares in its partly-owned subsidiary, Shenzhen Development Bank, following the initial acquisition of a near 20 percent stake in the bank two years ago and an asset-restructuring plan last month that boosted the group's stake to over 52 percent.
The latest share subscription will take Ping An's ownership to as much as just more than 61 percent.
Sally Yim, senior credit officer at Moody's, said: "We view the transaction as credit negative for Ping An's insurance subsidiaries, as the additional investment in the bank and our expectation of further investment mean there will be fewer capital resources for the subsidiaries, namely Ping An Life Insurance and Ping An Property & Casualty Insurance. Both Ping An Life and Ping An P&C are growing very rapidly. As such, their need for capital equals that of Shenzhen Development Bank."
Ping An's investment in the bank is seen as part of its "three-pillar strategy" involving banking, insurance and asset management.
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