HSBC defeated an attempt to break up the bank and divest its lucrative Asian business at its annual investor meeting in Birmingham, England on Friday, but still faced a revolt against its governance and top executive pay.
Europe’s largest bank had faced proposals from Hong Kong-based individual investor Ken Lui and backed by its largest Asian shareholder Ping An to consider a radical restructuring and increase its dividends.
But both resolutions were rejected by about 80 percent of votes cast at the meeting and HSBC said no other top 50 institutional investors had supported the protest votes.
Ping An also stepped up her campaign against HSBC by voting against several other resolutions, including the re-election of HSBC chairman Mark Tucker, as well as the top executive salary report.
These resolutions passed, but with about 20 percent of the votes cast, which the bank said reflected Ping An’s vote.
HSBC is grappling with a months-long campaign by Ping An to divest the Asian business that generates most of its profits amid rising geopolitical tensions between China and the West.
A spokesperson for Ping An said the company respects shareholder choices, but advises HSBC senior managers to listen to investor suggestions “with an open mind” and take steps to increase the company’s value.
“This is a strong rebuttal from the majority of shareholders, with Ping An as the only voice pushing for a breakup,” said John Cronin, banking analyst at Goodbody.
“I think this closes the door on the proposal for some time – although we could see similar pressures re-emerge under different market conditions.”
Shareholder Lui told reporters through a translator after the event that, despite the defeat, he planned to put pressure on HSBC’s management, including by trying to mobilize the bank’s huge retail shareholder base in Hong Kong in support of its position .
Lui previously questioned HSBC’s board directly during Friday’s awkward meeting, prompting HSBC’s Tucker to say criticism of the bank’s performance showed “a fundamental misunderstanding of HSBC’s business”.
Tucker also said any breakup of the bank would undermine its global strategy and hurt its earnings, reiterating the bank’s argument that it would be risky and costly.
Rising battle
Lui, Ping An and supporters of the breakup always faced an uphill battle to secure the 75 percent of votes cast needed to succeed.
With a voter turnout of about 50 percent, Ping An’s shareholding represents about 18-19 percent of the vote against the bank, HSBC said in a statement.
HSBC tripled its profit in the first quarter as rising interest rates boosted its earnings and paid its first quarterly dividend since 2019.
HSBC’s Tucker also told investors that the bank still intended to sell its French retail operations and that negotiations for a sale were continuing after warning last month that the deal could be jeopardized.
Like the Barclays investor meeting earlier this week, HSBC’s event was repeatedly interrupted by climate activists singing songs, while a protester stood at the front of the hall with a banner reading “No more dirty coal.”
Another protester underwent a symbolic “greenwashing” in a bathtub placed outside the conference room.
Big banks have long been targeted by green activists who say lenders have not done enough to curb funding for polluting companies and industries.
Barclays’ annual meeting on Wednesday was disrupted by activists who sang a song inspired by the Spice Girls’ “Stop,” calling for the bank to halt funding for oil and gas.