London The Chinese insurance group Ping An has failed for the time being with its plan to split up the British bank HSBC. The major shareholder and the activist investor Ken Lui had proposed to the general meeting that the bank’s profitable Asia business be spun off and that the dividend be increased significantly. Both requests were rejected with about 80 percent of the votes.
Ping An, which owns about 8 percent of HSBC’s shares, has been urging the bank’s top management to spin off its Asian operations for a year in order to offer local shareholders a better valuation. HSBC’s board of directors had asked shareholders to oppose the demerger plans, with the support of independent shareholder advisers ISS and Glass, Lewis & Co.
The vote is a win for Chairman Mark Tucker and CEO Noel Quinn, both of whom insist a split would destroy important synergies for the global bank. Ping An said it respects shareholder votes, but advises the bank to listen to shareholder proposals with an open mind.
Previously, Quinn and his leadership team had been confirmed in office by the AGM, but received about 20 percent votes against.
HSBC tripled its pre-tax profit to almost $13 billion in the first quarter of the current fiscal year thanks to rising interest rates. The big bank had served its shareholders with the first dividend since 2019 and a share buyback of two billion dollars.
Along with the major Chinese shareholder Ping An, some private investors are also calling for the major bank HSBC to be split up.
(Photo: Reuters)
Ping An wants to benefit more from the particularly profitable Asian business and fears that HSBC could be caught between the fronts of rising geopolitical tensions between China and the West.
Tucker disagreed: “Our global presence generates a significant portion of our earnings and it is central to our overall strategy,” said the Chairman of the Board of Directors in his speech. A restructuring or spin-off would jeopardize the global synergies.
Ping An had previously criticized management’s statements on the “costs and risks” of a split as exaggerated.
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