HSBC’s biggest investor calls for bank split Business

HSBC’s biggest investor has demanded the bank spin off its Western business and focus on China, in the latest geopolitical battle to shake up the lender.

Chinese insurance giant Ping An, which owns 9.2% of the company, reportedly presented the breakup plans to Mark Tucker, chairman of HSBC, and chief executive Noel Quinn.

It would end the bank’s 157-year history as a lender straddling Europe and Asia, leaving it to focus on its most profitable businesses in mainland China and Hong Kong.

The bank dismissed the idea on Friday night, insisting it already had the “right strategy” in place.

But the revelation will reopen the debate about HSBC’s center of power in the UK and the pressure it faces while navigating competing demands from the West and China.

The London-headquartered bank has been accused by British MPs of ‘aiding and abetting’ Beijing’s authoritarian crackdown in Hong Kong, after expressing support for controversial security laws.

Meanwhile, he has come under pressure in China for “colluding” with US authorities after passing on information about Chinese telecommunications giant Huawei’s alleged attempts to circumvent sanctions on Iran.

Ping An reportedly argued that these tensions will only grow in the coming years, the Financial Times reported, as the conflict in Ukraine and other issues strain relations between Beijing and the West and force companies to choose their field.

The Chinese insurer said splitting the business – founded as Hongkong and Shanghai Banking Corporation in 1865 – would allow investors to choose which parts they want to own and give more autonomy to the Asian segment.

She is said to be particularly unhappy that pressure from regulators in Britain, 6,000 miles from Hong Kong, led to the bank’s 2020 dividend being canceled for the first time in 75 years.

Ping An declined to comment. HSBC said it was “committed to maximizing value for all of our shareholders”, but added: “We believe we have the right strategy and we are focused on executing it.

“Implementing this strategy is the fastest way to generate higher returns and maximize shareholder value.

“HSBC has been one of the best performing banking stocks in the world over the past year.

“The most important thing for management to focus on is to continue to generate higher returns, as we have done with great success, despite the disruptions of Covid-19.”

A senior City banking source said the situation would be particularly difficult for HSBC, which has pivoted to China and underscored the country’s importance under Mr Tucker’s leadership.

The bank, which employs more than 200,000 people and 40 million customers globally, made two-thirds of its profits in Asia last year and shifted more important positions to Hong Kong.

This could make it harder for board members to oppose the logic of separating the company from the less successful Western side.

“They are in a very difficult situation,” added the source.

Persistent questions about the importance of Asia have led the bank to reconsider the location of its headquarters in the past.

HSBC was based in Hong Kong until 1993 when it moved to London to help secure approval for its takeover of Midlands Bank.

But after a review in 2016, the board decided not to change that arrangement.

In other developments on Friday, it emerged that HSBC was facing accusations of “greenwashing” its climate change dossier.

The Advertising Standards Authority (ASA) found that two HSBC advertisements had misled customers by highlighting the lender’s green activities without mentioning that it continued to finance companies “which contribute significantly to carbon dioxide emissions”. carbon and other greenhouse gases.