For many investors, HSBC, Europe’s largest lender with a venerable position in the UK banking industry, has little to criticize.
But for the company’s biggest investor, the sprawling Chinese insurance giant Ping An, that’s not enough.
Over the past year, Ping An Bank has campaigned to persuade HSBC to somehow spin off its Hong Kong-based business. It was a move that HSBC’s board strongly resisted as costly and ineffective.
The clash will culminate at HSBC’s annual shareholder meeting in Birmingham, UK on Friday, where investors will vote on two proposals backed by Ping An.
These initiatives face long odds despite Ping An owning an 8% stake. Influential investment advisors opposed the move, and HSBC’s latest results were strong. Earnings reporting It far exceeded my expectations. But Ping An, who first invested in his HSBC in 2017, shows little sign of pulling out.
Since its founding in Hong Kong in 1865, HSBC has aimed to bridge East and West. Since then, he has moved his headquarters to the UK and expanded his financial reach around the world, bringing his assets to nearly $3 trillion and ranking him among the top 10 largest banks in the world.
Still, the company continues to derive nearly half of its revenue from customers in Asia, including Hong Kong and mainland China, with the remainder coming from Europe, the Middle East and North America. It has also moved to divest businesses in less important markets, such as retail banking in Canada and the US.
Western banks’ uniquely strong presence in growing Asian markets puts HSBC on a solid footing, especially as the Chinese economy re-emerges from pandemic lockdowns.
But for Ping An and some other investors, the bank hasn’t had enough to bolster its China-bound business, and is siphoning money to shore up its slow-growing business in the West. What bothered me was that HSBC stopped paying stock dividends in early 2020 after the Bank of England banned paying British banks to save capital during the pandemic.
Insurers also fear HSBC will be hit by geopolitical tensions between Beijing and the West. The bank was criticized in China for aiding the U.S. prosecution of Huawei’s chief financial officer, Meng Wanzhou.But it also drew condemnation from American lawmakers freeze account Pro-democracy activists in Hong Kong, at the request of local authorities, for HSBC’s then head of Asia operations public support National security laws imposed by Beijing in its territory.
Ping An is huge on its own. world’s largest insurance Not only the company, but also healthcare and banking. Pressure on HSBC management to consider different ways of splitting up the Asian business has been repeatedly rejected. Last month, it backed a shareholder proposal to require HSBC to periodically review its structure and return its dividend to pre-pandemic levels.
Michael Huang, chief executive of Ping An’s wealth management division, said: “We are very disappointed in HSBC’s management’s consistent and closed attitude towards all solutions. said in a statement.
Conceding to the objections of HSBC management, Ping An proposed listing the bank’s Hong Kong division as a separate listed company, but let HSBC retain its majority stake.
Still, the bank said it was still unconvinced. The stance was backed by a shareholder advisory board that advises investors on how to vote in corporate elections. One of them, Institutional Shareholder Services, cited a “lack of detailed grounds commensurate with the implications of the proposal” when recommending rejection of the plan.
A few days before Friday’s annual meeting, HSBC’s first-quarter earnings report probably gained more support from other investors. The lender said its earnings exceeded investor expectations.After-tax earnings more than tripled from a year ago to $11 billion on the back of higher interest income and one-off accounting gains. became.
“It’s hard to find holes” in the results, said Pearly Mong, a research analyst at Keef, Brouillette & Woods, in a phone interview. “It’s a very strong beat.”
More important to restless shareholders was HSBC’s pledge to buy back up to $2 billion of its stock and resume paying a quarterly dividend for the first time since 2019. , suggested that lenders could return more money to investors, citing the results as evidence of a winning strategy.
“We believe the first quarter results reinforce our recommendations and show that our current strategy is the fastest and safest way to improve earnings,” Quinn told analysts on Tuesday. I’m here.
Ping An said in a statement that the positive results were the result of accounting actions and higher interest rates, and said it would continue to support the shareholder proposal.
