HSBC shareholders vote for breakup

HSBC was forced to vote on a proposal from Hong Kong investors that the bank should undergo a strategic overhaul. This would include a spin-off the Asian business.

Ken Lui, an investor and leader of a campaign for the Asian arm’s spin-off, requested that the vote be taken. A second resolution that Ken Lui has submitted to the bank’s shareholders, asking for the bank to raise its dividends to pre-Covid levels, will be put to vote by the bank’s shareholders.

Mark Tucker, the bank’s chairman, made the rebel resolutions public in a notice sent to investors on Friday. He urged shareholders not to vote for the plans at the annual shareholder meeting that will be held in Birmingham on May 5.

Ping An, China’s largest shareholder, intervened to force the bank to end its Asian operations. The bank employs over 200,000 people in 64 different countries. This campaign lasted a full year.

It is unclear if the Chinese insurer will use its 9 percent stake to support Lui. Lui has stated that he “never engaged with Ping An at any time”.

HSBC rejected the plan to dissolve the bank and made clear in the notice to shareholders that it opposed changing its structure. It stated that the bank had evaluated drastic structural reforms over the years to increase shareholder value. The bank also said that it had recently “considered” and “evaluated” these reforms in the second half 2022. All options, it concluded, would “destroy value”, result in “significant one-off cost” and “result both in a material loss for shareholders and lower dividends.”

Asian investors were furious when HSBC, the Bank of England’s Prudential Regulation Authority, withdrew its dividend.

Rebel investors demanded that the bank report quarterly on its strategy and plan to increase its value by implementing structural reforms, including strategic reorganisation, spin-off and restructuring its Asian business. HSBC rejected this as it implied an “open-ended commitment for a structural review”.

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