HSBC’s biggest shareholder hits out at bank’s refusal to split up Asia business

HSBC’s biggest shareholder has said it is “extremely disappointed” in the bank’s failure to split up its Asia business and criticised its “closed-minded attitude” in considering restructuring proposals.

Ping An Asset Management, which owns an 8% stake in the global banking giant, has been in a long-running dispute with HSBC over calls for a spin-off, which would see a separate Hong-listed business headquartered in Asia.

HSBC has repeatedly argued that breaking up the bank would be costly and destroy value for shareholders.

Michael Huang, the chairman and chief executive of Ping An Asset Management, said the bank has “refused to verbally engage in discussions on the proposals, and only simply shared with us their review conclusions”.

He went on: “HSBC management simply defaults to statements ‘that this proposal is materially value destructive’ followed by a laundry list of reasons why they cannot entertain such a proposal with little to no acknowledgement of any benefits.”

Furthermore, HSBC’s management has “exaggerated many of the cost and risks” of breaking up the bank, he said.

However, HSBC maintained that it has had numerous discussions including meetings and calls with Ping An’s executive team.

A spokesperson said: “Over the last year we have had extensive discussions with Ping An on these topics, during which we have explained the material value destruction that would ensue were we to implement their proposals.”

Ping An told investors it was concerned by certain elements of the bank’s performance, including that it has been driven mostly by interest rate rises.

“It is necessary for HSBC to push for structural reform to fundamentally address HSBC’s underlying market competitiveness issues, improve performance, enhance value and accelerate growth opportunities in Asia”, Ping An said.

Restructuring would cost money in the short term but would make it more profitable, competitive and valuable in the long term, Mr Huang argued.

But HSBC has stood firm that it does not recommend splitting up the business because its international business model is better for shareholders and for banking customers.

It has urged shareholders to vote against the proposals which it will put to them at its annual general meeting next month.

A spokesperson for HSBC said: “It is our judgment, supported by third-party financial and legal advice, and with third-party assurance, that alternative structural options will not deliver increased value for shareholders.

“Rather, they would have a material negative impact on value.

“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 2022 annual results announcement.”

The bank has outlined a strategy for growth which it says is improving its performance and profits.