Ping An, a Chinese insurer, discusses listing bank’s Asian operations separately in Hong Kong
One of HSBC’s largest shareholders told it to consider spinning off its profitable Asian operations that are centered in Hong Kong. In that context, the UK-headquartered bank is facing pressure to break up.
Bloomberg was the first to report that Chinese insurer Ping An discussed listing the Asian operations separately in Hong Kong. According to the latest public filing, Ping An owns 8.3% of the bank, a stake worth £8.2bn.
The bank has gradually found itself pulled between Asia, where many analysts believe its future growth prospects lie, and its United Kingdom headquarters, where it is regulated by British authorities.
In 2021, MPs heavily criticized the bank for agreeing to freeze the accounts of pro-democracy activists in Hong Kong. Furthermore, HSBC publicly supported a security law in Hong Kong widely seen as repressive.
Amid concerns about the effects of Russia’s invasion of Ukraine and rising defaults, HSBC earlier last week reported a 30% decline in profits for the first quarter of 2022. But its Asian business accounted for 61% of adjusted pre-tax profits.
Nevertheless, any break-up would likely entail a long process with the great involvement of the UK government and regulators. No such discussions have launched. At the bank’s annual meeting on April 29, Chairman Mark Tucker told shareholders that he was content with the current strategy.
A spokesperson for HSBC said the lender was “one of the better performing bank stocks globally over the last year”.
The spokesperson added:
“HSBC has a regular program of engagement with all our investors and is committed to maximizing value for all our shareholders. We believe we’ve got the right strategy and are focused on executing it. Delivering on this strategy is the fastest way to generate higher returns and maximize shareholder value.”
“HSBC supports customers, corporates, and institutions across key capital and trade hubs around the world. This network manifests itself in our leading global franchises across retail, wealth, and wholesale banking. The most important thing for management to focus on is continuing to drive higher returns, as we have done very successfully, despite the disruptions of Covid-19.”
Ping An was displeased particularly with the Bank of England’s direction that UK banks should not pay dividends at the start of the coronavirus pandemic, the Financial Times reported.
Ahead of Friday’s annual meeting, the Financial Times reported that Ping An had also threatened to vote against the re-election of several board members as well as the bank’s new remuneration policy. However, 95% of shareholders were all in support of the resolutions.
