HSBC mulls ditching Canadian business amid Ping An breakup pressure

HSBC is mulling hiving off its Canadian business in a move that could raise billions for Britain’s biggest bank.

The banking giant has asked JP Morgan to identify possible buyers of its Canadian arm. Sky News first reported the news today.

If HSBC did leave Canada – where it has built up a sizable £6bn presence since the 1980s, according to some estimates – it could embolden its largest shareholder’s efforts to split out the bank’s Asian arm.

Chinese insurer Ping An has been lobbying HSBC for months to demerge its Asian business, which generates most of the group’s profits.

Ping An’s campaign was given impetus by UK financial regulators stopping banks from handing out shareholder returns during the Covid-19 crisis, effectively starving HSBC’s Asian investors.

“HSBC regularly reviews its businesses in all its markets,” a spokesperson for the bank said.

“Amongst the options being explored is a potential sale of HSBC Group’s 100 per cent equity stake in HSBC Bank Canada. HSBC Bank Canada is a very strong business and Canada’s leading international bank,” they added.

A large group of Hong Kong retail investors with stakes in HSBC have supported Ping An’s campaign. Breaking up HSBC could unlock value to reimburse shareholders, the insurer has argued.

Ping An owns around eight per cent of the bank. HSBC operates in more than 60 countries and is headquartered in the UK, where it first made a name for itself in the early 1990s after acquiring Midland Bank.

“Amongst the options being explored is a potential sale of HSBC Group’s 100 per cent equity stake in HSBC Bank Canada. HSBC Bank Canada is a very strong business and Canada’s leading international bank,” they added.

HSBC’s London-listed shares closed 4.45 per cent higher today.