HSBC is overstating Asia demerger cost, Ping An claims
Britain’s largest bank HSBC is blowing up the financial hit from carving out its Asia business to water down pressure from its biggest shareholder to demerge, sources close to the matter said.
Chinese insurer Ping An claimed selling off the high street lender’s highly profitable Asia arm would unlock $35bn (£29bn) in value for shareholders that have been starved of payouts, according to a source close to the firm.
In its latest set of results, HSBC argued bowing to Ping An’s – which owns over eight per cent of the bank – demands would raise its tax bill and knock its credit rating.
In a veiled pushback in its second quarter earnings report, Noel Quinn, HSBC’s chief, said the bank’s “strength as a well connected, global institution is the main reason our wholesale clients choose to bank with us”.
“We are determined to capitalise on the advantages our network gives us,” Quinn, 61, added.
Despite having a huge presence on British high street, HSBC earns most of its profits in Asia, specifically Hong Kong and China.
Retail investors in the former British colony represent a big chunk of the bank’s shareholder base.
They were burnt during the Covid-19 crisis when UK market regulators forced banks to end dividends to preserve money in case the economic downturn triggered a default surge.
That move has fuelled Ping An’s campaign to break up HSBC.
The insurer has also argued the bank’s exposure to escalating tensions between the west and China has dragged on its performance and squeezed shareholder giveaways.
HSBC profits hit $9.2bn (£7.5bn) in the first six months of the year, down from the same period in 2021 but well above analysts’ expectations.
Its shares, listed on London’s premier FTSE 100 index, jumped 0.8 per cent today.
A $1.1bn (£902m) build up of reserves to cope with an expected uptick in defaults caused by household budgets being squeezed by inflation surging to historic highs weighed on HSBC’s profits.
HSBC said it had nothing further to add to what was said in its latest set of results and a meeting with Hong Kong shareholders last week.
Ping An has been contacted for comment.