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HONG KONG (Reuters) – HSBC Holdings (NYSE:HSBC) PLC on Monday pushed aside a proposal by an activist shareholder in Hong Kong to spin off its mainstay Asia business, reiterating the adverse impact on the Asia-focussed bank’s cost and clients.
Addressing shareholders in Hong Kong, its biggest market, HSBC Chairman Mark Tucker said the bank’s board was unanimous in recommending that shareholders vote against proposals to restructure the bank and pay fixed dividends.
The comment came as Ken Lui, an individual HSBC shareholder and leader of a Hong Kong-based investor group, called for the break up of the bank. His second proposed resolution calls on HSBC to restore pre-COVID-19 dividend levels.
Tucker told the shareholders a restructuring or spin-off of its Asia business, as demanded by Lui, would create a major period of uncertainty for clients, and employees and shareholders would be disrupted.
“In fact, there will be significant cost over a number of years with material execution risks. So it would not be in your interest to split the bank,” Tucker told hundreds of the bank’s individual investors.
The meeting in Hong Kong is being held ahead of HSBC’s main annual general meeting in the British city of Birmingham on May 5, to discuss the bank’s 2022 results and “other matters of interest”, the bank said in a notice to shareholders last month.
Lui’s proposals echo calls by HSBC’s largest shareholder, Ping An Insurance Group Co of China Ltd, to demerge its Asian division, which accounts for the bulk of its revenue and profit.
