Shares in Britain’s biggest bank climbed today in a sign investors backed a proposal by its largest shareholder to carve out its profit-machine Asia business.
FTSE 100-listed HSBC’s shares gained 1.61 per cent today on the first day of trading in London since calls to break-up the lender strengthened.
Ping An, a Chinese insurance giant which owns a little under 10 per cent of the bank, proposed the plan in a move designed to crack up shareholder goodies.
The insurer has reportedly urged HSBC to look into spinning off the Asian business, or other steps to boost its valuation.
A huge proportion of the bank’s profits are generated in China and Hong Kong, its biggest market.
In its latest quarterly results, over $2.8bn (£2.2bn) of its $4.2bn (£3.4bn) total profits were sourced from its Asia business.
HSBC was founded in Hong Kong in 1865 and carved out a position as broker between the western and eastern financial community.
It has come under intense scrutiny for its decision not to condemn China’s imposition of a draconian security law on Hong Kong citizens.
Ping An on Monday called for an investor debate over the future of the British bank, which a HSBC spokesperson swotted away, telling The Times “we believe we’ve got the right strategy”.
HSBC has form of re-shaping its strategy this year to tap into Asia business.
In March, it offloaded its Greek retail bank to European lender Pacreta Bank as part of a wider five-year £4.5bn restructuring plan, which included cutting its loss-making US retail bank last year.
Analysts queried whether selling the Asia arm would work.
“A less diversified, less profitable HSBC would almost be certainly downgraded by the rating agencies,” Filippo Alloatti, head of credit at Federated Hermes Limited, said.