Ping An Insurance of China, one of the world’s biggest insurers and a major HSBC stakeholder, has been pushing for a break-up of the Group’s Asian and UK operations.
A group of about a hundred HSBC shareholders are clamoring for a spin-off from the bank. The investors, led by individual shareholder Ken Lui in Hong Kong, are also urging the lender to restore annual dividends to 51 cents per share.
Ping An Insurance of China, one of the world’s biggest insurers and a major HSBC stakeholder with 8.3% of the capital, has been pushing for a break-up of the Group’s Asian and UK operations.
After a year of extensive but inconclusive discussions, and with mounting pressure on various sides for a break-up, the annual meeting on May 5 is expected to be a fiery battleground. To be approved, the resolutions need support from at least 75% of the company’s investors. In conflict with Ping An and the hundred small shareholders pushing for a significant restructuring, HSBC CEO Noel Quinn and Chairman Mark Tucker are strongly opposing the split, labeling it ‘risky and destructive.’
Shareholder advisor Glass Lewis is also instructing HSBC investors to reject the proposal.
“Beyond the logistical and regulatory complications of dismantling such a large global bank, the main beneficiary of a HSBC spin-off would ultimately be the Central Bank of China, and this would strengthen China’s grip on the Asian financial sector,” says Mario Unali, Senior Portfolio Manager of Kairos Partners. “On the other hand, a break-up is likely to attract huge interest in the face of greater returns.”
The bank is currently valued at around $125 billion on the London stock market. Ping An argues that spinning off the two main operations could generate over $26 billion in extra returns for investors. The Asian arm is currently HSBC’s most profitable division, having created approximately $16 billion in dividends over the past three years.
Founded in Hong Kong in 1865 and headquartered in the UK since 1993, HSBC has a global presence with offices in 64 countries around the world.