HSBC's exit from Ping An in jeopardy The $9.4bn sale of HSBC's stake in China's Ping An Insurance has been thrown into doubt by a revelation that crucial financing for the deal is likely to be withdrawn. The buyer of the stake, Thailand's Charoen Pokphand Group, was planning to fund its purchase with loans from China Development Bank. But people with knowledge of CDB's plans said the Chinese state-owned lender had changed its mind, presenting a major obstacle to completion of the deal. One of the people said that CDB financing will "100 per cent not happen." A second person said that "unless someone really senior tells them to go ahead and do it, they are not going to do it." CDB is entirely owned by the government and has a mandate to lend in support of official policy. The bank's head, Chen Yuan, is the son of a revolutionary leader and is one of the country's most powerful dealmakers. HSBC had expected to book a profit of about $3bn on the sale of its stake in Ping An, China's second-biggest insurer by assets, making the deal an important part of its strategy to strengthen its balance sheet. Shares in Ping An fell 4 per cent in Hong Kong on Tuesday after the South China Morning Post first reported that CDB was reconsidering its decision to finance the transaction. HSBC shares were down 0.8 per cent in London. CDB's shift followed local Chinese media reports that said the deal was more complex than what had been publicly announced by any of the parties involved. According to the announcements, CP was to fund the first part of the acquisition - nearly 21 per cent of HSBC's stake in Ping An - with its own cash and then pay for the remaining 79 per cent with a mixture of cash and CDB financing. The payment for that initial 21 per cent tranche was made in early December, wired from CP to HSBC. However, Caixin Century Weekly, a leading Chinese financial magazine, subsequently claimed that one-third of the money had come from a Chinese investor, Xiao Jianhua, a low-profile but well-connected financier. Mr Xiao has denied that report through his lawyer. CP has said that its funding arrangements for the deal were legal. But one person familiar with the matter said the report about Mr Xiao's possible involvement prompted a second look from CDB. The person added that CDB had only provided verbal support for the deal and had not signed a contract. CP is known to have good relations with CDB, which offered CP credit lines of more than $10bn in 2007 to help it expand in China. Analysts had reacted with surprise when the news first surfaced that CP Group - the unlisted flagship of the agribusiness, retail and telecoms conglomerate controlled by Thai tycoon Dhanin Chearavanont - might buy HSBC's stake in Ping An. CP has net assets of more than $9bn, roughly the same size as the stake it is attempting to buy. But the question of how it could fund the deal had been thought to be resolved when HSBC announced that CP would receive financing from CDB, a signal that top Chinese officials regarded the deal favourably. A CP Group spokesman said: "At the moment we don't have any comment; any statement from us would have to be okayed by HSBC and Ping An as well, and this would take time." CDB could not be reached for comment. HSBC declined to comment. Additional reporting by Gwen Robinson in Bangkok and Paul J Davies in Hong Kong