HSBC’s top shareholder accuses the bank of overstating the costs of splitting off its Asian operations
HSBC’s largest shareholder has accused the group of exaggerating the risks of spinning off its Asian operations.
Chinese insurer Ping An fired an attack on the bank’s management ahead of next week’s annual general meeting.
The statement from Ping An Asset Management chairman Michael Huang escalates the feud between the two sides since it first began pushing for a split last November.
HSBC is listed in London but has its origins in Hong Kong and makes most of its money in Asia.
Break-up row: Chinese insurer Ping An fired a broadside at HSBC’s management ahead of its annual general meeting to be held next week
It argues that a break would not add value to shareholders. But Huang said, “We are extremely disappointed by HSBC management’s consistent narrow-minded attitude towards all solutions.
“We believe that both the HSBC team and the appointed paid external advisors have an adamant stance against reviewing structural options, despite our continued request for open dialogue and the demands of other shareholders.”
Huang criticized HSBC’s claim, in response to the cut off talks, that such a move would “destroy material value.”
“Management not only refused to accept benefits, but in our view has exaggerated many of the costs and risks,” he said.
The fallout comes at a time of growing tension between China and the West.
HSBC’s current structure frustrated Hong Kong investors dependent on its dividends when it, like other UK banks, was ordered to halt such payouts during the pandemic.
At the same time, the bank’s management in Britain has been accused of kowtowing to Beijing amid the communist state’s crackdown on democracy in Hong Kong.
The latest statement crystallizes the division between Ping An and other shareholders on the one hand and the bank’s management and supporters on the other ahead of the AGM on May 5.
At the meeting, shareholders will be asked to vote for a strategic review and reinstatement of higher dividend payments, in a motion filed by Ken Lui, leader of a group of Hong Kong-based small investors, and supported by Ping An.
Glass Lewis, the shareholder advisory body, supported HSBC’s position in a report ahead of the annual meeting.
It said: ‘We do not believe that further evaluation or the pursuit of a spin-off is warranted or advisable at this time.’
A spokesman for HSBC said: ‘It is our assessment, supported by third party financial and legal advice, and with third party assurance, that alternative structural options will not add value to shareholders. On the contrary, they would have a material negative effect on the value.’
HSBC also denied an allegation by Ping An that the bank had “refused to discuss the proposals verbally.”
The bank has had extensive consultations with Ping An on these issues, the spokesman said.