Ping An has thrown its weight behind proposals from investor Ken Lui to break up HSBC ahead of the bank’s Annual General Meeting (AGM) in early May, according to Reuters.
The Chinese insurer will vote in favour of resolutions calling for the bank to lift its dividends and for it to provide regular updates on the demerger of its Asian business.
The proposals demand that HSBC report every quarter on a plan to increase the bank’s value through “structural reforms” including “restructuring its Asia businesses”.
On dividends, Lui’s proposal demands HSBC hold its annual dividend at more than $0.51 (40p) per share as long as there are “sufficient distributable profits”.
Ping An holds around an eight per cent stake in HSBC, making it one the bank’s largest shareholders.
HSBC has faced intense pressure from its shareholders in recent years to break up the bank, with shareholders arguing that HSBC’s global divisions hold back its Asian business.
In 2022 HSBC’s Asian business contributed $13.7bn (£11.1bn) to the bank’s $17.5bn (£14bn) total profit. The European business meanwhile saw a $415m (£336m) loss.
Over the past few years HSBC has withdrawn from retail markets in the US, Canada and France, although the bank’s plans to sell its French retail business faced problems last week after rising interest rates forced the buyer to stump up more cash.
Discontent with HSBC was also fuelled when British regulators prevented banks from handing out dividends during the pandemic. That decision starved Asian shareholders of dividends, provoking a backlash from retail investors in Hong Kong.
HSBC announced large payouts at its last set of quarterly results including a $0.21 (£0.16) special dividend in an attempt to assuage its shareholders.
Speaking to investors in Hong Kong ahead of the AGM, chair Mark Tucker said a spin-off would impose “significant cost(s) over a number of years with material execution risks,” concluding it would “not be in your interest to split the bank.”
An HSBC spokesperson said: “The Board recommends all shareholders vote against these two resolutions because they are not in the best interest of the company or its shareholders.
“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.”
HSBC’s AGM will be held on 5 May.