Global Courant 2023-05-05 10:39:44
Noel Quinn, chief executive officer of HSBC Holdings Plc, right, Mark Tucker, chairman, center, and Peter Wong, deputy chairman, at the bank’s shareholders’ meeting in Hong Kong, China, Monday, April 3, 2023. The senior executives of HSBC faced are Hong Kong shareholders, from retirees to taxi drivers, as the lender tries to fend off an attempt in Asia to split the bank. Photographer: Paul Yeung/Bloomberg via Getty Images
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HSBC Shareholders will vote on proposals at the bank’s annual meeting on Friday, including whether or not to split off its Asian operations.
Resolutions 17 and 18 on the agendafiled by a group of investors led by Ken Lui, calling for a “strategic review” of the company, including the spin-off proposal and fixed dividends.
These motions have received support from HSBC’s top shareholder Ping an insurancewho expressed the same opinion as Lui in a statement.
In March, HSBC advised investors to reject the two resolutions, a position supported by investment advisory firms ISS and Glass Lewis.
On Tuesday, HSBC reported a better-than-expected run of first quarter results and restored the quarterly dividend.
Speaking to CNBC’s Emily Tan on Friday prior to the meeting, Lui said that “some of the actions I took put pressure on management, so it delivered a better-than-expected report. I’m pleased with the performance this quarter We’ll continue to monitor management’s behavior.”
However, HSBC CEO Noel Quinn pushed back on Lui’s resolutions. He previously told CNBC on April 14 that he doesn’t believe fixed dividends are “sensible corporate governance and prudent capital management for a bank.” He said a dividend payout ratio is more balanced and “is the model of the industry”.
Last month, HSBC said divesting its Asian business “would result in material loss of value to HSBC shareholders.”
Quinn said management is already improving the bank’s performance and is on a “very good track”.
The “special resolutions” require 75% of the vote to pass, but Lui expressed confidence.
“When I introduced these resolutions, I was very confident that they will both pass because they can stimulate the share price to go up. As a shareholder of HSBC, even if you don’t support it, you shouldn’t vote either .” against it,” he said.
Michael Makdad, senior equity analyst at Morningstar, said he personally doesn’t expect these resolutions to clear the 75% hurdle. But he told CNBC’s “Squawk Box Asia” that the proposals reflect a longer-term problem “that probably won’t go away for HSBC.” He predicted that the bank will continue to put pressure on management from activist or leading shareholders going forward.
Makdad said much of the pressure stems from the fact that HSBC operates in many countries around the world, but derives most of its profitability from its branches in Hong Kong and the UK.
“It would make sense to simplify the structure. However, as a bank it is not easy to simplify it,” he said.
He pointed to HSBC’s attempts to sell both its French store and its Canadian operations. “If that continues, that will be great. But all these things take time, and it’s not easy.”
In light of the recent banking sector woes in the US and Europe, Makdad is quick to add that this does not mean HSBC is a troubled bank.
“It’s just a bank that has some great operations (in) Hong Kong and other places. It has some very profitable, very strong operations. And then it has other operations that it may not need,” he said.
Shares of HSBC in Hong Kong were down 0.6% on Friday.
The annual meeting begins at 6:00 PM Hong Kong time.
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(TagsToTranslate)Ping An Insurance Group Co of China Ltd
