HSBC is facing pressure to disintegrate after one of its largest shareholders told the UK-based bank to consider separating its profitable Asian operations based in Hong Kong.
Chinese insurer Ping An has discussed a separate list of Asian operations in Hong Kong, Bloomberg reported. Ping An owns 8.3% of the bank, according to the latest public documents, a stake worth 8.2 billion British pounds.
HSBC is increasingly being pulled between its headquarters in the United Kingdom, where it is regulated by the British authorities, and Asia, where many analysts believe that the prospects for future growth are its.
The bank was sharply criticized by lawmakers last year for agreeing to freeze the accounts of pro-democracy activists in Hong Kong. HSBC has also publicly backed Hong Kong’s security law, which is widely seen as repressive.
HSBC earlier this week reported a 30% drop in profits for the first quarter of 2022 amid fears of rising defaults and the effects of Russia’s invasion of Ukraine. However, its Asian operations account for 61% of adjusted pre-tax profits.
However, any break-up is likely to lead to a long process with the deep involvement of UK regulators and the government. Such discussions have not started.
Chairman Mark Tucker told shareholders at the bank’s annual meeting on Friday that he was pleased with the current strategy.
An HSBC spokesman said the lender was “one of the best performing bank stocks in the world in the last year”.
“HSBC has a regular engagement program with all our investors and is committed to maximizing value for all our shareholders,” the spokesman said. “We believe we have the right strategy and we are focused on implementing it. Implementing this strategy is the fastest way to generate higher returns and maximize shareholder value.
“HSBC supports customers, corporations and institutions in key capital and commercial centers around the world. This network is reflected in our leading global franchises in retail, wealth and wholesale banking. The most important thing that management needs to focus on is to continue to provide higher returns, as we have done very successfully, despite the interruptions of Covid-19. ”
The Financial Times reported that Ping An had expressed disappointment, especially with the Bank of England’s instructions that UK banks should not pay dividends at the start of the coronavirus pandemic.
Ping Ann also threatened to vote against the bank’s new remuneration policy, as well as the re-election of several board members ahead of Friday’s annual meeting, the Financial Times reported. However, 95% of shareholders voted in favor of the decisions.
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