HSBC's top execs face tense shareholders calling for a breakup

Published 3 April 2023 · finance

Hong Kong HSBC’s top brass defended their strategy Monday to frustrated shareholders in the lender’s largest market, as Europe’s biggest bank continued to face calls

Hong Kong HSBC’s top brass defended their strategy Monday to frustrated shareholders in the lender’s largest market, as Europe’s biggest bank continued to face calls to be split up. At an informal shareholder meeting in Hong Kong, Chairman Mark Tucker and CEO Noel Quinn took questions from investors on issues ranging from how the bank was approaching demands for an overhaul of its business to its purchase of Silicon Valley Bank’s UK arm. In prepared remarks, Tucker and Quinn each reiterated the board’s recommendation that shareholders vote against a resolution on the docket for its annual general meeting in May that would force the bank to come up with a plan to spin off or reorganize its Asian business — the lender’s main source of profits. Tucker said the board was unanimous in its opposition to the resolution, stating plainly: “It would not be in your interest to split the bank.” He said the board had previously reviewed a range of options for restructuring the bank, and concluded that such alternatives would “materially destroy value for shareholders,” including dividends. “Our strategy is working,” Tucker told the room of more than 1,000 shareholders. “Our current strategy is moving dividends up.” Calls for a breakup HSBC has been facing calls to separate its Asian business from the rest of the bank over the past year. Shareholders in Hong Kong — where HSBC is a mainstay of many retail investors’ portfolios — contend that the London-based lender’s performance has been dragged down by its businesses in other regions. Quinn addressed those complaints head-on Monday, saying “our profits in Hong Kong and the UK are no longer being dragged down by underperformance elsewhere.

The group is performing well as a whole.” Pressed later by a shareholder on the issue, Quinn said a breakup of the bank would result in “significant revenue loss” because much of its business relied on cross-border transactions. Mark Tucker, chairman of HSBC, left, and Peter Wong, chairman of the Hong Kong and Shanghai Banking Corporation, departing following the bank's shareholders meeting in Hong Kong on Monday. Paul Yeung/Bloomberg/Getty Images Investors have also been unhappy with HSBC scrapping its dividend in 2020, at the request of British regulators. They argue that if the lender cordoned off its activities in Asia, it would no longer have to expose Hong Kong shareholders to requests in other jurisdictions. Christine Fong, a district council member in Hong Kong, said she represented about 500 small shareholders who had been affected by the dividend cancellation. “Street hawkers, taxi drivers or teachers — they all relied on the dividend to pay for their regular expenses, like mortgage, insurance payments, school fees,” Fong told CNN. “That’s why, three years ago, what HSBC did upset those small minority shareholders.” Fong has now joined calls for shareholders to vote in favor of the proposal for the bank to spin off its Asian business, despite the lender bringing back its dividend in 2021, albeit at a lower level. An HSBC bank branch in Hong Kong last July. HSBC is a mainstay of many retail investors' portfolios in the city, which is also its top market. Louise Delmotte/Bloomberg/Getty Images Ken Lui, an activist shareholder in Hong Kong who put the resolution together, doubled down on his call for support ahead of the meeting Monday.