HSBC boss denies Beijing will ensure bank is broken up in two
- The British lender has faced a campaign from its largest shareholder
- Ping An wants it to divide its eastern and western operations
- The insurance group has been critical of years of disappointing earnings at the sprawling global lender
HSBC has vowed to keep its business together – and denied that politicians in Beijing were behind calls to split the bank in two.
The British lender has faced a campaign in recent months from its largest shareholder, Chinese state-backed insurer Ping An, to divide its eastern and western operations.
The insurance group has been critical of years of disappointing earnings at the sprawling global lender.
HSBC has vowed to keep its business together – and denied that politicians in Beijing were behind calls to split the bank in two
But HSBC’s boss Noel Quinn, mounted a defence of the bank as it unveiled its first-half results yesterday, and promised higher dividends in an attempt to appease Hong Kong shareholders.
He said the bank had hired investment banks Goldman Sachs and Robey Warshaw to evaluate a break-up, but they had come to the conclusion that splitting the business would come with ‘material costs’ and a ‘high risk of failure.’ ‘
There would be significant risk over a three-to-five-year period when clients, employees and shareholders would all be distracted,’
Quinn said of the breakup proposal. ‘Alternative options will not deliver increased value for shareholders.
‘Rather, they would have a negative impact on value, and our current strategy is the fastest and safest way to get to the higher returns and dividends we all want to see.’
In an effort to head off pressure from Ping An, Quinn will join HSBC chairman Mark Tucker tomorrow to address a group of Hong Kong shareholders – the first such in-person meeting since 2019.
Experts said any suggestion that Ping An, whose largest shareholder is the Chinese government, was acting under its own volition was ‘laughable’. Michael Sheridan, an expert on the communist state and author of The Gate To China, told The Mail on Sunday:
‘This is a highlevel, state-controlled move.’ Quinn denied that calls for a split were politically motivated.
‘The conversations between ourselves and Ping An have been purely around commercial issues. We do not see this as an issue of politics,’ he said. ‘We believe the discussions between ourselves and Ping An have been purely around commercial issues. We do not see this as about politics.’
HSBC has also denied claims that the Chinese government is trying to influence its work. The lender reported profits of £7.5bn for the first half of the year, down from £8.9bn last year but above analysts’ expectations.
It set aside £897m to cover loans expected to sour as the economic environment worsens. Shares rose 6.1pc, or 31.5p, to 545.2p yesterday.
Separately, HSBC is to give around 17,000 lower-paid employees, making up almost half of the UK-based operation, a one-off bonus of £1,500. All five of the UK’s largest retail banks have pledged to pay staff more money as household incomes are squeezed by inflation.