HSBC accused of exaggerating cost of spinning off its Asian operations

HSBC’s biggest shareholder has accused the group of exaggerating the risks involved in spinning off its Asian operations.

Chinese insurer Ping An fired off a broadside against the bank’s management ahead of its annual general meeting held next week.

The statement from Ping An Asset Management’s chairman Michael Huang escalates the spat between the two sides since it first began to push for a break-up last November.

HSBC is listed in London but originates in Hong Kong and makes most of its money in Asia.

Break-up row: Chinese insurer Ping An fired off a broadside against HSBC’s management ahead of its annual general meeting held next week

It maintains that a break up would not deliver any increased value for shareholders. But Huang said: ‘We have been extremely disappointed by HSBC management’s consistent closed-minded attitude to all solutions.

‘We believe that both the HSBC team and its appointed paid external advisors have an adamantly preconceived view against reviewing any structural options, despite our continued request for an open dialogue and the demands of other shareholders.’

Huang criticised HSBC’s claim, in response to break up calls, that such a move would ‘destroy material value’.

‘Not only did management refuse to countenance any benefits but also, in our view, exaggerated many of the costs and risks,’ he said.

The fallout comes at a time of mounting tension between China and the West.

HSBC’s present structure frustrated Hong Kong investors reliant on its dividends when during the pandemic it was ordered, like other UK banks, to halt such payouts.

At the same time, the bank’s management has been accused in Britain of kowtowing to Beijing amid the Communist state’s crackdown on democracy in Hong Kong.

The latest statement crystallises divisions between Ping An and other shareholders on one side and the Bank’s management and its 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 restoration of higher dividend payments, in a motion filed by Ken Lui, leader of a group of Hong Kong-based small investors, and backed by Ping An.

Glass Lewis, the shareholder advisory body, backed HSBC’s position in a report ahead of the annual meeting.

It said: ‘We do not believe further evaluation or pursuit of a spin-off is warranted or advisable at this time.’

A spokesman for HSBC said: ‘It is our judgment, supported by third-party financial and legal advice, and with third-party assurance, that alternative structural options will not deliver increased value for shareholders. Rather, they would have a material negative impact on value.’

HSBC also denied a claim by Ping An that the bank had ‘refused to verbally engage in discussions on the proposals’.

The bank has had extensive discussions with Ping An on these topics, the spokesman said.

This post first appeared on Dailymail.co.uk