Ping An stands ground on HSBC Asia spinoff

Chinese insurer Ping An Insurance, HSBC’s largest shareholder, continues to call for the spinoff of HSBC’s Asia operations despite executives reportedly being against the idea.

Mounting tension between the US and China has highlighted HSBC’s precarious position straddling east and west as Europe’s biggest lender. Ping An, led by Chinese tycoon Peter Ma, believed HSBC was in need of urgent change and pitched its restructuring bid against the move presented by the bank’s leaders last week, Bloomberg reported. The insurer was dismayed by HSBC’s underperformance and worried that geopolitical risks would affect the London-headquartered bank further.

Ping An insisted a spin-off of the bank’s Asia operations would generate additional market value of up to US$35 billion, releasing US$8 billion in capital requirements, and save on costs.

HSBC had listed 14 reasons against an “alternative structure”, including a transition period that could last as long as five years as well as loss of direct access to US dollars.

CEO Noel Quinn said HSBC had considered many restructuring options over recent years complete with third-party financial and legal advice but concluded that the proposed change in structure would have a negative impact on the bank.

Ping An had previously commented that it was open to a debate and to any proposal that would benefit shareholder returns at HSBC, the Business Times Singapore reported.

Last week, HSBC reported that its pre-tax earnings had sunk 15% to US$9.2 billion. It was also one among many major banks to cancel dividends early in the pandemic after a de facto order from the Bank of England – a move that angered Hong Kong investors.