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HSBC’s top executives passionately defended their strategy on Monday to resolve shareholder concerns in the lender’s largest market, as Europe’s biggest bank continues to face pressure to be separated. At an informal shareholder meeting in Hong Kong, Chairman Mark Tucker and CEO Noel Quinn answered investor questions on various issues, including how the bank was handling demands for a restructuring and its recent acquisition of Silicon Valley Bank’s UK division.
In their statements, Tucker and Quinn reiterated the board’s opposition to a resolution scheduled for the annual general meeting in May that would compel the bank to devise a plan to spin off or reorganize its Asian business – the primary source of profits for the bank. Tucker adamantly stated, “It would not be in your interest to split the bank” and emphasized the unanimous dissent from the board.
HSBC has been under mounting pressure to separate its Asian business for the past year, as shareholders in Hong Kong, where HSBC holds a significant place in retail investors’ portfolios, argue that the bank’s overall performance has been impacted by its operations in other regions. Quinn addressed these concerns directly on Monday, asserting that the profits in Hong Kong and the UK are no longer influenced by underperformance elsewhere, and the group is performing well overall.
Despite the dividend cancellation in 2020 at the behest of British regulators, HSBC brought back its dividend in 2021, albeit at a reduced level. Small shareholders, directly affected by the dividend cut, are now advocating for the proposed spinoff of the Asian business.
Activist shareholders like Ken Lui are pushing for support ahead of the May vote on the resolution, which requires a 75% majority to pass. HSBC’s largest shareholder, Ping An, has also been urging the bank to reconsider its structure. Huang Yong, chairman of Ping An’s asset management arm, has expressed support for initiatives that could enhance HSBC’s performance and value, including a potential spinoff of its Asian business.
In the face of recent scrutiny, HSBC defended its acquisition of SVB UK following the collapse of its parent company in the United States. This move was seen as a strategic business opportunity that allowed HSBC to onboard numerous innovative startups as clients. The bank’s leaders reassured investors that due diligence was conducted despite the expedited nature of the deal.
Looking ahead, HSBC remains optimistic amidst the current banking industry challenges, with Tucker expressing confidence that recent events do not pose a systemic risk. While the sector may face a period of uncertainty, HSBC is focused on staying resilient and continuing to deliver value to its shareholders.