LONDON – HSBC has hit back at its largest shareholder Ping An's latest proposal to restructure the bank and separate its Asia business into a hong kong-listed entity, saying it would result in a material loss of value for shareholders.
Europe's largest bank said in a statement published on Wednesday that it had had extensive meetings with Ping An, including around 20 meetings at a senior level, but there remained disagreement.
HSBC said the structural reforms suggested by Ping An would undermine the bank's international business model and erode earnings, dividends and shareholder value.
“HSBC is a global systemically important bank. It is not in the interests of its shareholders, customers or stakeholders for HSBC's structure to remain the subject of prolonged debate,” the statement added.
HSBC said it had evaluated Ping An's proposals “with an open mind”, in an apparent reference to the Chinese insurer's claims in its own statement on Tuesday that the lender had refused to listen to its ideas.
Shareholders will vote at the bank's annual meeting on May 5 on two resolutions filed by a Hong Kong investor and supported by Ping An, calling for higher dividends and a regular update on strategic proposals such as the spin-off plan.
HSBC said investors should vote against both resolutions.
“In our view, the board's strategy and plans appear valid and are likely to result in greater returns and value, on a risk- and cost-adjusted basis, than the overly prescriptive and, in our opinion, unnecessary proposals submitted by the proponent,” Glass Lewis said in a report.
Ping An publicly called for the creation of “a separately listed Asia business headquartered in Hong Kong,” in a statement on Tuesday.
The more than 2,000-word statement offers the most detailed insight yet into Ping An's stance on HSBC and underlines the increasingly fractious relationship between Europe's largest bank and one of its most important investors.
The latest sally comes about a year after the Chinese insurer was first publicly identified as behind a campaign to push the London-headquartered lender to consider a break-up of its business.
Ping An said in the statement it remains “deeply concerned” about HSBC's performance, noting its results of late had been largely buoyed by rising interest rates and were sub par when compared to similar banks.
While Michael Huang, chairman of Ping An Asset Management, said Ping An was heartened by recent improvements in HSBC's recent results and exits from operations including Canada and US retail banking, the firm remains “deeply concerned about HSBC on five fronts.”