By Kelvin Soh and Denny Thomas

HONG KONG (Reuters) - HSBC said it was in talks to sell its $9.3 billion stake in China's Ping An Insurance (2318.HK), stepping up a programme by Europe's biggest bank to shed non-core parts of its business to boost profitability.

HSBC spent $1.7 billion to build up a 15.6 percent stake in China's second-largest insurer in 2002 and 2005, but a sale has been widely expected as part of its three-year recovery plan in the wake of the 2008 financial crisis and regulatory reforms.

In a statement to the Hong Kong Stock Exchange, the bank confirmed it was in talks to sell the stake, adding that a sale may not result. The statement followed a report on the sale talks by the Hong Kong Economic Journal, a respected Chinese language newspaper.

HSBC has announced 41 disposals and closures since the start of 2011, and the potential sale of the Ping An shares fuelled speculation about other assets that are not core to its day-to-day business operations.

"This makes sense for HSBC because it's been disposing of so many of its non-core businesses," said Ivan Li, an analyst at Maybank-Kim Eng in Hong Kong. "The question that everyone has will be on HSBC's stake in Bank of Communications ."

HSBC owns 19.9 percent of Bank of Communications (BoCom) (3328.HK), China's No.5 lender, worth about HK$79 billion ($10.2 billion), according to Thomson Reuters data.

HSBC will record a pre-tax profit of up to $6.5 billion if it sells the Ping An stake, according to estimates from Mizuho Securities analyst Jim Antos. This would help boost its Tier One capital ratio up to 13.6 percent from about 13.1 percent currently.

"The only problem is finding a buyer for the Ping An stake," said Antos. "You can't sell if you can't find a buyer, because it's impossible to dump so many shares on to the market at one time."

A sale would also require approval from China's insurance and banking regulators, narrowing the list of possible buyers, as the Chinese authorities have traditionally allowed only financial groups to take stakes in the country's major banks and insurers, Antos said.

PING AN SHARES FALL

Shares of Ping An, the world's second-largest life insurer by market value, fell to near a two-month low on the news, while HSBC's stock nudged up 1 percent. Ping An's market capitalization is $52.55 billion, according to Thomson Reuters.

The Chinese government has frowned upon large divestitures by Western institutions from Chinese companies, as it indicates the partnership is no longer fruitful.

But HSBC has been exiting non-core businesses since Chief Executive Stuart Gulliver laid out his plans in May 2011 to boost profitability.