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HSBC’s top leadership recently defended their strategy to shareholders in their largest market, addressing concerns about whether the bank should be split up. The shareholders raised questions about the bank’s approach to demands for business overhaul and its recent acquisition of Silicon Valley Bank’s UK unit.
Chairman Mark Tucker and CEO Noel Quinn emphasized the board’s stance against a resolution that would require it to spin off or reorganize its Asian business. Tucker assured shareholders that splitting the bank would not be in their best interest, as it could potentially diminish shareholder value.
Tucker and Quinn reiterated the success of their current strategy, highlighting that dividends were increasing. The board unanimously opposed the resolution to split the bank, citing that HSBC’s profitability in Hong Kong and the UK was not being weighed down by underperformance in other regions.
Despite facing calls to separate its Asian business, the leadership emphasized that the bank was performing well overall. Activist shareholders have been pushing for a breakup, citing concerns about dividend cancellations in 2020 and subsequent lower levels in 2021.
HSBC faces challenges from shareholders who relied on dividends to cover regular expenses like mortgages and insurance payments. Despite the bank reinstating dividends in 2021, there are still calls for a spinoff of its Asian business.
Activist shareholders, like Ken Lui, are rallying shareholders to vote in favor of the spinoff proposal. The resolution will be voted on in May, requiring 75% of votes for approval. Lui plans to engage institutional shareholders to garner support.
HSBC’s large shareholder, Ping An, has also supported calls for restructuring to improve the bank’s performance. While HSBC’s leaders defended their recent acquisition of SVB UK, critics question the due diligence process amidst the parent company’s collapse.
In conclusion, despite challenges facing HSBC, the leadership remains confident in their strategy and the future of the bank’s performance. They believe that a period of uncertainty in the banking industry will eventually settle, and the bank is well-positioned to navigate through it.