China in new call for HSBC breakup: Beijing-backed insurer Ping An goes public for the first time
HSBC’s Chinese firebrand has publicly called for the bank to be broken up, just weeks after boss Noel Quinn said the matter was ‘closed’.
Ping An, the Beijing-backed insurer, is also pushing for HSBC to seek “much more aggressive” cost cuts.
It is the latest broadside in a battle between the bank and its largest shareholder that has lasted most of this year.
Rejected: HSBC chairman Mark Tucker has been against a spin-off
Ping An privately revealed to HSBC in February that he wanted the bank to spin off its Asia business from its Western operations, claiming they were holding back the banking giant’s performance. HSBC struck back, arguing that the group’s strengths lay in being a global business that could bridge East and West.
Just last month, when asked about the breakup proposals, Quinn, chief executive of HSBC, said discussions on the subject were “closed”.
But in an interview with the Financial Times, Ping An Asset Management chairman Michael Huang said: “We will support any move, including a spin-off, that helps improve HSBC’s performance and value.”
Sources close to the Chinese company said it was still pushing to break up HSBC and discussions were “ongoing”.
Shenzhen-based Ping An, founded in 1988, has justified its breakup calls by pointing to years of lackluster share price growth at the lender and the cancellation of its dividend during the Covid-19 pandemic, a policy that was applied by the Bank of England. But Quinn and HSBC chairman Mark Tucker have urged investors to go ahead with their plan, which has seen the bank divest non-core parts of its business in countries including France and Brazil.
They are also looking to cut costs, including through a program of 35,000 job cuts.
An HSBC spokesman said last night: “We remain on track to meet all of our financial targets, including a return on tangible equity of at least 12 per cent, from 2023.”
However, Huang said it was “urgent” for HSBC to go further.
The lender needed to “be much more aggressive in radically cutting its costs,” he added, arguing that cuts could be made in “manpower and information technology.”
Huang told reporters: “This is the most important, urgent and absolutely necessary action for HSBC to improve its business performance, reduce costs and increase efficiency, particularly amid slowing growth in the global financial industry.”
While critics say the push for change at the bank is driven by Chinese government officials and their desire to get their hands on the London-based lender’s Asian shares,
HSBC has denied that this is the case. HSBC shares yesterday soared 5.8 percent, or 26.85 pence, to 490 pence.