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<span class="source__location" data-editable="location">Hong Kong</span>
<span class="source__text" data-editable="source">CNN</span>
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HSBC's leaders faced a challenging meeting with shareholders in Hong Kong, where the bank's top executives defended their current strategy amidst growing pressure for a potential breakup of the bank.
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During the meeting, Chairman Mark Tucker and CEO Noel Quinn fielded inquiries from investors regarding various issues, including the bank's response to demands for a business overhaul and its recent acquisition of Silicon Valley Bank's UK division.
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Both Tucker and Quinn reiterated their opposition to a resolution that would require the bank to devise a plan to either spin off or reorganize its profitable Asian arm, stressing that splitting the bank would not be beneficial for shareholders.
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Tucker emphasized that the board had carefully reviewed restructuring options and concluded that such actions would harm shareholder value, including dividend payouts.
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Addressing the shareholders, Tucker highlighted the success of the current strategy in increasing dividends for investors.
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Calls for the separation of HSBC's Asian business from the rest of the bank have intensified over the past year.
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Shareholders in Hong Kong, a significant market for HSBC, believe that the bank's performance has been negatively affected by its operations in other regions.
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Quinn refuted these claims, stating that profits in Hong Kong and the UK are no longer impacted by underperformance elsewhere, emphasizing the group's overall strong performance.
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When questioned about the potential breakup, Quinn warned of significant revenue loss due to the bank's reliance on cross-border transactions.
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Shareholders expressed discontent over HSBC's dividend cancellation in 2020, arguing that a potential split would shield Hong Kong investors from requests in other regions.
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Christine Fong, representing small shareholders affected by the dividend cancellation, highlighted the impact on individuals relying on dividends for essential expenses.
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Fong emphasized the negative repercussions of HSBC's actions on minority shareholders and their financial stability.
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FAQ
1. Why are shareholders calling for a breakup of HSBC?
Shareholders are expressing their concerns and pushing for a potential breakup of HSBC due to dissatisfaction with the bank’s performance and structure.
2. What is HSBC’s response to calls for a breakup of its Asian business?
HSBC’s top executives have defended the bank’s current strategy and opposed the resolution to split or reorganize its Asian business, stating that it would not benefit shareholders.
3. How has HSBC’s dividend cancellation affected shareholders?
Shareholders, especially in Hong Kong, have been negatively impacted by HSBC’s dividend cancellation, leading to discussions about the potential benefits of separating the bank’s activities in Asia.
4. What concerns have been raised about HSBC’s cross-border transactions in the event of a breakup?
There are worries that a breakup of HSBC could result in significant revenue loss due to the bank’s heavy reliance on cross-border transactions, as highlighted by CEO Noel Quinn.
Fong Supports HSBC Shareholder Proposal for Asian Business Spinoff
Fong has now shown support for shareholders to vote in favor of the proposal for HSBC to spin off its Asian business, even though the bank reintroduced dividends in 2021 at a reduced rate.
Ken Lui, an activist shareholder from Hong Kong, reiterated his call for backing before the upcoming meeting on Monday.
The resolution, requiring a 75% majority vote in May, was highlighted as achievable by Lui during a media interaction outside the meeting venue.
Lui, personally holding a stake valued at 100 million Hong Kong dollars ($12.7 million), outlined plans for targeted outreach to institutional investors to present their case and secure their backing.
He further stated that his team would canvass 18 districts in Hong Kong to inform HSBC shareholders about their opportunity to vote and safeguard their rights.
HSBC is under additional pressure from its major shareholder, Ping An, China’s largest insurer, with an 8% stake in the bank, supporting calls for strategic restructuring.
In statements made public last November, Huang Yong, chairman of Ping An’s asset management division, expressed support for initiatives that could enhance HSBC’s performance and value, including a potential spinoff.
Ping An remains consistent in its views, advocating for a reorganization to boost HSBC’s valuation and simplify global regulatory commitments.
The insurer, while not specifying a specific direction, is open to supporting any actions that could enhance the bank’s stock performance or value, including the spinoff of its Asian business.
As scrutiny mounts, HSBC’s leadership was questioned about its acquisition of SVB UK, shortly after its parent’s collapse in the U.S., for £1 ($1.20).
Critics have raised concerns about HSBC’s ability to conduct thorough due diligence on SVB UK’s clients due to the rapid nature of the deal.
In response, Quinn and Tucker defended the acquisition as a strategic move that brought in numerous innovative startups as customers, refuting claims of inadequate due diligence time.
Tucker addressed the recent industry turbulence, expressing confidence in HSBC’s resilience amidst challenges affecting the banking sector.
Despite market uncertainties, Tucker remains optimistic about the sector’s stability, anticipating a period of fluctuation before conditions normalize.
FAQs
What is the shareholder proposal Fong supports for HSBC?
Fong supports the proposal for HSBC to spin off its Asian business, urging shareholders to vote in favor of the resolution.
Who is advocating for strategic restructuring at HSBC?
Ping An, China’s largest insurer and HSBC’s major shareholder with an 8% stake, is backing calls for the bank to rethink its structure and explore initiatives to boost performance and value.
Why has HSBC faced scrutiny regarding its acquisition of SVB UK?
HSBC’s quick acquisition of SVB UK following its parent company’s collapse raised concerns about the level of due diligence conducted on SVB UK’s customers.
