LONDON – Europe’s biggest bank HSBC defeated a resolution from Hong Kong-based shareholders, backed by major investor Ping An, to potentially spin off its lucrative Asia business, the bank’s chairman Mark Tucker said on Friday.
Mr Tucker told investors at the end of the annual investor meeting held in Birmingham in England that shareholders had backed the board in all resolutions.
The special resolutions submitted by individual investor Ken Lui recommending that the bank boost dividends and review its strategy – including the possibility of carving out the Asia business that generates most of the bank’s profit – were both defeated, Mr Tucker said.
Indicative results from Friday’s annual meeting show that about a fifth of voting investors backed the call for HSBC to report regularly on the possibility of carving out its Asian unit, while 19.2 per cent supported lifting its dividend to the pre-pandemic level.
The vote comes at the end of a week in which the London-headquartered bank posted a surge in quarterly net profit, boosted by rising interest rates and its rescue of the British arm of failed United States lender Silicon Valley Bank.
Addressing the Birmingham meeting, which faced disruption by climate protesters, Mr Tucker insisted the proposal to split the bank would not be beneficial.
“We concluded that the alternative structural options would materially destroy value for shareholders, including putting your dividends at risk. This remains our unanimous view today,” he said.
But siding with minority investors, Ping An – which owns more than 8 per cent of HSBC – argues that the lender lags behind international peers and that a recent improvement in performance was tied to rising interest rates, which it claims have peaked.
The US Federal Reserve this week hinted that it would pause a policy of hiking borrowing costs aimed at cooling inflation.
The European Central Bank, meanwhile, on Thursday delivered a smaller interest rate increase than it has recently, as higher borrowing costs begin to take their toll, but said it had “more ground to cover” in fighting red-hot price increases.
“It is necessary for HSBC to push for structural reform to fundamentally address HSBC’s underlying market competitiveness issues,” Mr Michael Huang, chairman and chief executive of Ping An Asset Management, said recently.
HSBC was among a number of major banks to cancel dividends early in the Covid-19 pandemic after a de facto order from the Bank of England, a move that riled some Hong Kong investors.
Some retail investors have cited the dividend cancellation as a reason to back the spin-off proposal. REUTERS, AFP, BLOOMBERG
