A man walks past HSBC logos displayed outside the bank's local headquarters in Hong Kong on April 28, 2020. (ANTHONY WALLACE / AFP)
HONG KONG/SINGAPORE – HSBC's bosses met retail investors in Hong Kong on Tuesday, urging them that a strategy to operate as a unified bank is better for its future than a break-up mooted by top shareholder Ping An Insurance Group Co of China.
The London-headquartered group is under pressure from its largest shareholder, Ping An Insurance Group Co of China Ltd, to explore options including spinning off its mainstay Asia business to increase shareholder returns.
Our strategy which is now two and half years into execution should put the bank on the path to deliver returns in 2023 at a level we have not achieved in the last 10 years … This return should help drive and increase the share price and have a positive impact on the dividend.
Mark Tucker, HSBC Holdings Plc chairman
At a meeting attended by hundreds of shareholders, management of HSBC Holdings PLC were quizzed by investors on its strategy for dividends and growth.
"Our strategy which is now two and half years into execution should put the bank on the path to deliver returns in 2023 at a level we have not achieved in the last 10 years," Chairman Mark Tucker said. "This return should help drive and increase the share price and have a positive impact on the dividend."
Hong Kong is HSBC's biggest market and a key investor base for the bank. Some investors in the city have been vocal in their support of Ping An's plan.
ALSO READ: HSBC raises profitability goal, seeks to rebuff call for break-up
The meeting – HSBC's first with retail shareholders in the city in three years – was held a day after HSBC rejected the break-up call as it reported forecast-beating profit and promised chunkier dividends.
A man wearing a face mask walks past a bronze lion statue at the HSBC headquarters in Hong Kong, July 11, 2022. (KIN CHEUNG / AP)
Ping An, which has been building a stake in HSBC since 2017, has not called publicly for a break-up but has said it supports all reform proposals that could help increase the long-term value of the bank
It was not immediately clear if Hong Kong's retail shareholders have the heft to eventually force a vote on a break-up. Big institutional investors have so far not commented on the issue.
Ping An, which has been building a stake in HSBC since 2017, when the bank's share price was about a third higher, has not called publicly for a break-up but has said it supports all reform proposals that could help increase the long-term value of the bank. The insurer owned 8.23 percent of HSBC as of early February.
Dividend angst
Hong Kong retail shareholders were particularly unhappy when HSBC scrapped its dividend in 2020 during the COVID-19 pandemic, following a request to lenders by the Bank of England.
"Retail shareholders would welcome any proposals that change the status quo, or boost confidence of investors in management," said shareholder Ken Lui, founder of an HSBC shareholder group.
Hong Kong retail shareholders were particularly unhappy when HSBC scrapped its dividend in 2020 during the COVID-19 pandemic, following a request to lenders by the Bank of England
"But why am I being vocal and support the spin-off proposal? Because I don't have confidence in management," he said.
Lui declined to disclose details of his HSBC holdings, and it was not immediately clear how many bank shareholders are part of his investor group that was launched on Monday in support of HSBC's break-up.
In 2016, HSBC decided to keep its headquarters in London, rejecting the option of shifting it back to its main profit-generating hub of Hong Kong after a 10-month review.
HSBC Chief Executive Noel Quinn told reporters on Monday the bank is unlikely to appoint a Ping An executive to its board due to a conflict of interest.
READ MORE: HSBC launches $1 billion planned share buyback
"There is the potential for conflict of interest given there is an overlap in their business model with ours in terms of insurance and banking," Quinn said.