UPDATE 2-AmEx, Allianz raise $1.9 bln in ICBC stake sales

* Stock sold at HK$3.86 per share - source

* AmEx could use proceeds to offset charges, loan losses (Adds analyst comments)

HONG KONG, April 28 - German insurer Allianz and U.S. credit card group American Express raised a combined $1.9 billion on Tuesday through the sale of shares in Chinese banking giant ICBC.

The move was expected, as the two sellers, hoping to tuck away cash in the grim economic climate, had signaled a desire to sell shares in Industrial and Commercial Bank of China, the world's largest bank by market value.

Allianz and American Express sold large blocks of ICBC's Shanghai-listed shares at HK$3.86 per share, or a 4 percent discount to Monday's closing price, a source with direct knowledge of the deal said on Tuesday. ICBC is also listed in Hong Kong.

When China restructured its major banks several years ago, Western financial institutions took stakes in several Chinese lenders, hoping to profit from the investments while forging a strategic partnership in a fast-growing country.

ICBC went from being a bailed-out bank to the world's largest and most profitable, with a market capitalisation of more than $190 billion.

But after the financial crisis took hold last year, Western banks moved quickly to raise much-needed cash by selling out of their Chinese stakes.

Royal Bank of Scotland and Bank of America dumped shares in Bank of China and China Construction Bank, respectively, when lockups expired earlier this year.

While Goldman Sachs was originally free to sell half its 4.93 percent stake in ICBC this month and the rest in October, last month it pledged to keep 80 percent of that stake until April 2010.

Goldman also said at the time that it was in no rush to reduce its stake.

Allianz sold 3.22 billion ICBC shares and American Express sold 638.06 million to a select group of investors in private sales, ICBC said in a statement on Tuesday.

ICBC shares ended up 2.5 percent in Hong Kong at HK$4.12. The lender posted a 6.2 percent increase in first-quarter profit on Monday due to loan growth and higher fees, but its net interest income fell 12.9 percent.

Morgan Stanley cut its earnings estimate for ICBC for 2009 through 2011 by 1 to 2 percent.

SALE HELPS AMERICAN EXPRESS CUSHION CHARGES

American Express said in a regulatory filing that it expected a gain of $210 million -- $132 million after tax -- on the sale of the ICBC shares. The sale cut American Express' stake in ICBC by half.

Citigroup analyst Donald Fandetti said the fourth-largest U.S. credit card company could use the proceeds to cover charges related to a second round of layoffs and loan losses.

"They don't necessarily need the capital because I think their capital ratios are fine," Fandetti said. "That gain could offset the (second-quarter) charge of additional employee reductions and could also help offset any provisioning that would need to be done as well."

Last week, American Express said it expected a new round of layoffs and costs-cutting as it faces falling revenue and rising credit card losses.

Analysts estimated the company could save up to $600 million more in 2009, or around 4 percent of its estimated expenses, by cutting 3,000 jobs, slashing marketing by 10 percent, and trimming rewards costs.

American Express shares were up 20 cents to $24.43 in morning trading on the New York Stock Exchange.