HSBC bows to Hong Kong shareholder pressure and tables Asia breakup vote
Britain’s largest bank HSBC has bowed to pressure from a group of shareholders in Hong Kong and will table a vote on a proposal to revamp the business, including carving out its Asia arm.
First reported by The Sunday Times, the lender revealed the vote on Friday in an update to investors.
The poll was requested by Ken Lui, a shareholder who spearheads the group calling to spin-off its Asian business.
HSBC has also approved a vote on whether it should re-up its dividend to pre-Covid levels of no less than $0.51, paid every quarter.
The bank has told shareholders to throw out both proposals.
“The board recommends all shareholders vote against these two resolutions because they are not in the best interest of the company or its shareholders,” a spokesperson for the bank told City A.M.
“We remain clear that our current strategy is the fastest, safest and most value enhancing way to deliver returns. It is already delivering attractive and sustainable returns and dividends for shareholders, as was evident from our recent 2022 annual results announcement,” they added.
HSBC has been under pressure from shareholders in Hong Kong and its largest investor, Chinese insurer Ping An, to break off the Asian arm – which generates most of its profit – to ensure it is not dragged down by comparatively underperforming separate parts of the sprawling bank.
The calls gathered momentum after British regulators prevented banks from handing out dividends during the pandemic to ensure money was retained in the banking system to cushion the economic crisis caused by the virus.
That decision starved Asian shareholders of dividends, provoking a backlash from retail investors in Hong Kong.
HSBC’s roots are in Asia, where it was founded in 1865. It gained its main foothold in Britain after acquiring Midland Bank in the early 1990s.
HSBC recently conducted a review of whether selling off its Asia arm would be effective and, somewhat unsurprisingly, concluded the move would damage the bank’s international business model.