Hong Kong: HSBC Holdings’ largest active investor would support a breakup of the lender on the basis that a separate Asia-listed unit would create shareholder value.
Ping An Insurance (Group) Co. has held discussions with the bank on the idea of spinning off HSBC’s Asian operations and listing them separately in Hong Kong, according to people familiar with the matter. The shareholder believes a spinoff would win broad investor support.
China’s largest insurer owned 8 per cent of London-headquartered HSBC at the end of 2021, according to the bank’s annual report. About 65 per cent of HSBC’s profit before tax comes from Asia compared to a fifth from Europe.
Ping An supports all reform proposals from investors that can help with HSBC’s operations and ‘long-term value growth,’ a Ping An spokesperson said in an emailed statement on Saturday. A spokesperson for HSBC didn’t respond to requests for comment. Shares in HSBC rose 1.5 per cent in London.
HSBC is in the midst of a global reorganization intended to focus its resources on growing its core Asian markets, which are seen as providing the lender with the best growth opportunities. The bank is steering billions of dollars in capital toward Asia, while curbing or exiting unprofitable operations in Europe and the US.
The changes seek to tap into China’s rising affluence and the country’s financial opening-up while also expanding in other markets across Asia.
HSBC has already relocated much of its senior management to Hong Kong as part of this shift. That includes Nuno Matos, CEO of wealth and personal banking, and Barry O’Byrne, chief executive of global commercial banking.
Ewen Stevenson, HSBC’s Chief Financial Officer, said alongside the results that the bank was on the right path to boost its shares. “We’re not closed off to hearing alternative views, but we do think that executing the strategy will deliver a lot of shareholder value over the next 12 to 18 months,” Stevenson told Bloomberg TV.
Asked at the bank’s annual shareholder meeting Friday about its Asia pivot, Chief Executive Officer Noel Quinn said the bank was directing the bulk of its investment toward growing its businesses in the region. “It’s more of a pivot to our investments in Asia,” said Quinn.
Ping An boosted its stake in HSBC after the stock plunged in 2020. At that time, Ping An said its holding in HSBC was a long-term financial investment. The Shenzhen-based company has owned a major stake in HSBC since late 2017.