HSBC says split bank would result in ‘erosion of earnings’

The bank responded to the strong statement regarding a break-up plan by Ping An.

HSBC's board has defended the bank's current strategy days after its largest investor Ping An Asset Management Company expressed "deep concern" regarding its current strategy.

The PAAMC, along with other shareholders, suggested that the bank should “spin-off” HSBC’s Asian operation into a separately listed entity in Hong Kong instead.

However, this suggestion was ignored by the bank and PAAMC retaliated saying that HSBC “exaggerated many of the costs and risks”.

“In various conversations between Ping An and HSBC, it was noted that both parties agreed to disagree on a number of issues,” HSBC said.

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HSBC argued that their current strategy is functional and reaps better returns and dividends.

The bank added that reconfiguring HSBC Asia Pacific would lead to a material loss of value for the bank’s shareholders.

“Structural reforms of HSBC’s Asia Pacific businesses suggested by Ping An would significantly dilute the international business model upon which HSBC’s strategy is based,” HSBC said.

HSBC is unable to endorse or suggest to its shareholders any of the structural options that have been proposed or evaluated.

“Accordingly, the Board of HSBC recommends that shareholders vote against resolutions 17 and 18 as set out in the 2023 AGM Notice of Meeting available on the HSBC website.” HSBC added.