HSBC's top executives are facing intense pressure from shareholders to break up the bank amid concerns that its Asian business is dragging down profits in other regions. The lender's largest market, Hong Kong, where HSBC has a significant presence, saw the chairman and CEO address frustrated investors on Monday.
According to Chairman Mark Tucker and CEO Noel Quinn, the board has unanimously opposed a resolution that would force HSBC to come up with a plan to spin off or reorganize its Asian business, which generates most of the bank's profits. They argued that such a move would not be in shareholders' interest, stating that it would "materially destroy value for shareholders," including dividends.
However, small shareholders who relied on the dividend to pay their regular expenses are calling for the bank to spin off its Asian business, citing concerns over the impact of underperformance elsewhere. Activist shareholder Ken Lui has joined forces with these investors, urging them to support a proposal that would require 75% of votes to be passed in May.
The pressure on HSBC comes from both within and outside the company. Ping An, China's largest insurer, which holds an 8% stake in the bank, has backed calls for the bank to rethink its structure, citing a desire to improve performance and value. However, the insurance giant's views haven't changed since November, according to a person familiar with the matter.
The bank's recent acquisition of SVB UK, a British unit of Silicon Valley Bank, which collapsed in the US, has also raised concerns about due diligence. Critics have questioned whether HSBC thoroughly reviewed the financial statements of SVB UK's customers before making the deal.
In response, Quinn and Tucker defended the acquisition, calling it a good business opportunity that allowed the bank to gain hundreds of innovative startups as customers. They pushed back on the notion that management hadn't had time to carry out proper due diligence.
According to Chairman Mark Tucker and CEO Noel Quinn, the board has unanimously opposed a resolution that would force HSBC to come up with a plan to spin off or reorganize its Asian business, which generates most of the bank's profits. They argued that such a move would not be in shareholders' interest, stating that it would "materially destroy value for shareholders," including dividends.
However, small shareholders who relied on the dividend to pay their regular expenses are calling for the bank to spin off its Asian business, citing concerns over the impact of underperformance elsewhere. Activist shareholder Ken Lui has joined forces with these investors, urging them to support a proposal that would require 75% of votes to be passed in May.
The pressure on HSBC comes from both within and outside the company. Ping An, China's largest insurer, which holds an 8% stake in the bank, has backed calls for the bank to rethink its structure, citing a desire to improve performance and value. However, the insurance giant's views haven't changed since November, according to a person familiar with the matter.
The bank's recent acquisition of SVB UK, a British unit of Silicon Valley Bank, which collapsed in the US, has also raised concerns about due diligence. Critics have questioned whether HSBC thoroughly reviewed the financial statements of SVB UK's customers before making the deal.
In response, Quinn and Tucker defended the acquisition, calling it a good business opportunity that allowed the bank to gain hundreds of innovative startups as customers. They pushed back on the notion that management hadn't had time to carry out proper due diligence.
. like, I'm not sure what's more surprising - the fact that shareholders are freaking out about the bank's Asian business or that Ping An is backing them up 
. but for real, it makes sense why they'd want to shake things up - if the Asian market is dragging down profits, maybe it's time to separate those eggs from the rest of the basket 
.
. one thing's for sure, though: it'll be interesting to keep an eye on what happens next 
. I mean, can you blame them though? The Asian business is killing profits in other regions 
.
. They're like "hey, you guys need to rethink your structure" 
. I'm curious to see how this all plays out in May. Will they manage to get that 75% vote and break up the bank? Or will HSBC find a way to keep its Asian business intact? The drama is real! 
... I mean, you can understand why they wouldn't want to spin off their Asian business, but at the same time, it's got a huge impact on profits overall, and those regular dividend payments for small shareholders aren't gonna cut themselves 
it's crazy how some small shareholders who rely on dividends are calling for change, I feel for them, they must be so stressed 
meanwhile, Ping An is backing the idea of rethinking the bank's structure 
. Like, I get why shareholders are salty about the Asian business dragging down profits, but at the same time, it's not like they're trying to cut off their nose to spite their face 
. I mean, if spinning off the Asian arm is really what's needed to boost growth elsewhere, then I'm all for it 
. It's like, they're already living paycheck to paycheck, and then you take away their income source? That's gotta be super tough 
. And then there's Ping An, which is like a major player in the Chinese insurance scene... I don't know if backing calls for restructuring is really the best move for them 
. I'm all for taking risks and innovating, but not when it comes at the expense of our own safety nets 
.