Hong Kong
Cnn
–
The best HSBC brass defended their strategy on Monday on the shareholders frustrated on the largest lender market, while the largest European bank continued to face the calls to be divided.
During an informal meeting of shareholders in Hong Kong, President Mark Tucker and CEO Noel Quinn answered investors on questions ranging from how the bank approached requests to redesign its activities to buy the British arm of Silicon Valley Bank.
In the prepared remarks, Tucker and Quinn have each reiterated the recommendation of the board of directors according to which the shareholders vote against a resolution on the file of its annual general meeting in May which would oblige the bank to draw up a rotation or reorganization plan of its Asian activities – the main source of profits from the lender.
Tucker said the board of directors was unanimous in his opposition to resolution, clearly declaring: “It would not be in your interest to divide the bank.”
He said that the board of directors had previously examined a range of banking restructuring options and concluded that such alternatives “would considerably destroy the value of shareholders”, including dividends.
“Our strategy works,” Tucker said in the room of more than 1,000 shareholders. “Our current strategy is to increase dividends.”
HSBC has faced calls to separate its Asian activities from the rest of the bank in the past year.
Hong Kong shareholders – where HSBC is a pillar of numerous retail investor portfolios – argue that the performance of the lender based in London was driven by his companies from other regions.
Quinn approached these front complaints on Monday, saying: “Our profits in Hong Kong and the United Kingdom are no longer driven by sub-performances elsewhere. The group behaves well as a whole. ”
Topped later by a shareholder on the issue, Quinn said that a bank break would result in “significant loss of income” because a large part of its activities was based on cross -border transactions.
Investors were also unhappy that HSBC abandoned its dividend in 2020, at the request of British regulators. They argue that if the lender reduced his activities in Asia, he would no longer have to exhibit the shareholders of Hong Kong to requests from other jurisdictions.
Christine Fong, member of the District Council in Hong Kong, said that she represented around 500 small shareholders who had been affected by the cancellation of dividends.
“Street hawkers, taxi drivers or teachers – they all count on the dividend to pay for their regular expenses, such as mortgage, insurance payments, tuition fees,” FONG told CNN.
“This is why, three years ago, which HSBC upset these small minority shareholders.”
Fong has now joined the shareholders to vote in favor of the bank’s proposal to transform its Asian activities, although the lender brought back its dividend in 2021, although a lower level.
Ken him, a shareholder activist from Hong Kong who gathered the resolution, doubled his call for support before the meeting on Monday.
The resolution will require that 75% of the votes be adopted in May, but “nothing is impossible,” he told journalists outside the meeting place.
He, who said he personally held a value of 100 million dollars in Hong Kong ($ 12.7 million), has established plans for his team to focus on “targeted awareness of institutional shareholders to present our case and obtain their support”.
His group will also intervene 18 Hong Kong districts “to tell HSBC shareholders that they finally have a chance to speak for themselves and protect their rights by voting,” he added.
HSBC is also faced with the pressure of its largest shareholder.
PING AN (PNGAY), the largest insurer in China, has an 8% stake in HSBC and supported the bank’s calls to rethink its structure.
In a series of remarks made public by the Chinese firm last November, Huang Yong, president of the Ping An asset management branch, said: “We will support all initiatives, including a spin-off which is conducive to the improvement of performance and the value of HSBC.”
Since then, the opinions of the insurance giant have not changed, according to a person familiar with the issue.
The source told CNN that Ping An asked HSBC to explore a reorganization, with a view to stimulating its evaluation and simplifying its regulatory obligations around the world.
The insurer has not recommended a specific route to follow, but will take charge of all initiatives, including a spin-off of its Asian activities, which could increase the performance or value of its actions, added the person. PING AN did not immediately respond to a request for comments on how he planned to vote at the next general meeting.
HSBC leaders were also asked in Monfday, why the bank had picked up the British SVB unit after the astonishing collapse of its parent in the United States. The purchase was made for £ 1 ($ 1.20) last month, just a few days after folding SVB.
Critics have questioned HSBC’s ability to make a suitable adequate diligence on SVB UK customers because of the speed with which the agreement ended.
“Did HSBC examine SVB customers in detail?” Say, financial statements – if they can reimburse the loan? ” said fung.
Quinn and Tucker defended the acquisition, calling a good business opportunity that allowed the bank to win hundreds of innovative startups as customers. They rejected the idea that management had not had time to make an appropriate reasonable diligence.
Tucker also weighed on the recent tumult in the banking sector, saying that it did not expect an “immediate impact” on HSBC.
“After the collapse of a certain number of small regional banks and the takeover of Credit Suisse, the prices of all banks have been deleted,” he noted.
But he said he did not think that such developments represented “a systemic risk” for the sector. “I expect a period of uncertainty” before the nerves settled, he added.