HSBC dismisses claims of top stakeholder as dispute intensifies

HSBC has urged investors not to be swayed by calls from its top stakeholder to split up the bank, insisting it would result in the “material erosion” of earnings and disrupt global customers.

Chinese investor Ping An Asset Management, which owns an 8% stake in HSBC, has been in a long-running spat with the banking giant over calls for an Asia-headquartered spin-off.

The dispute intensified after the firm’s chairman, Michael Huang, said on Tuesday HSBC was refusing to consider its proposals and would not engage in any verbal discussions.

HSBC dismissed the claims, saying there had in fact been about 20 meetings with the senior management team over the past year, including with Mr Huang himself.

After extensive discussions with Ping An, other shareholders and assessing the options for its Asia arm, both businesses had “agreed to disagree” on a number of issues, the lender said.

The two firms disagree over whether or not splitting up the bank and having a separately Hong Kong listed, Asia-headquartered business would improve or worsen its financial prospects.

Ping An says the move would improve performance and growth opportunities in Asia, and make it more profitable and competitive in the long term.

However, HSBC argues such big structural change would only be costly and damaging.

The bank said: “Structural reforms of HSBC’s Asia Pacific businesses suggested by Ping An would significantly dilute the international business model upon which HSBC’s strategy is based.

“This would result in a material erosion of earnings, returns, dividends and shareholder value, and a disruption to our unique global customer service proposition.

“Accordingly, HSBC cannot support or recommend to its shareholders the structural options that have been proposed or otherwise considered.”

The dispute comes ahead of the bank’s annual general meeting on May 5, where a vote will be put to shareholders over the restructuring proposals.

HSBC said it recommends people vote against the proposals because it is not in the interests of shareholders or customers for its structure to remain the subject of a “prolonged debate”.

Voting against the proposals next month would bring the issue to a conclusion, it said.