- Ping An failed to secure 75% of the required vote to force through the split.
- HSBC has repeatedly rejected calls to restructure its operations, saying it would undermine its global growth strategy.
Top global bank HSBC foiled a plan Friday by one of its largest shareholders to split the bank from its Asian operations.
Ping An, which holds 8% of HSBC, failed to get the support of any other major shareholder during the annual general meeting held in Birmingham, UK on May 5. According to a report by the New York Times, the Chinese insurer only managed 20 per cent of the votes from the required 75%.
A separate proposal by the Shenzhen-based firm to restore dividends payouts by HSBC to the pre-pandemic levels also fell flat. The vote was a big win for the management of HSBC, who maintains that a spinoff of the banking giant would hurt revenues.
“Being global is how we generate a significant portion of our revenues and is central to our whole strategy,” said the bank’s chairman Mark Tucker. “A restructuring or spinoff would mean we lose this revenue as our bank would no longer have the connectivity our customers value.”
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Geopolitical Risks
But, according to Ping An, the 158-year-old institution needs to strengthen its China-based operations, which generate almost half of its revenues. Additionally, the insurer maintains that having the bank operate as it risks subjecting it to geopolitical risks involving China and the West.
Market analysts are interpreting political undertones in the push for the spin-off, considering the importance of HSBC in China’s financial hub Hong Kong. Steve Vickers, a corporate risk consultant in Hong Kong, told BBC that “there is a jarring gap between HSBC’S center of gravity in Hong Kong and its subservience to regulators in Britain.”
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The next step Ping An would take after losing the vote remains to be seen. The institution has reportedly vowed to mobilize shareholders in Hong Kong against HSBC’s top management stance.
