HSBC prepares to meet Hong Kong investors after rebuffing breakout call

A Chinese national flag flies in front of HSBC’s head office in Hong Kong, China July 28, 2020. REUTERS/Tyrone Siu

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SINGAPORE, Aug 2 (Reuters) – HSBC bosses will meet retail investors in Hong Kong, the biggest market for Europe’s biggest lender, on Tuesday as they seek to convince shareholders that their strategy to operate as world bank is essential to stimulate growth.

The London-based group is under pressure from its biggest shareholder, Ping An Insurance Group Co of China Ltd (601318.SS), to explore options including spinning off its core business in Asia to boost shareholder returns. Read more

The informal meeting, held to discuss earnings and strategy, comes a day after HSBC rejected a breakup call, reported better-than-expected profit and promised bigger dividends, sending its Hong Kong-listed shares to a one-month high. Read more

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Ping An, who has acquired a stake in HSBC since 2017, when the bank’s share price was around a third higher, has publicly said he backs any reform proposals that could help boost value long-term interest of HSBC Holdings PLC.

The insurer held 8.23% of HSBC in early February.

Local investors are also calling for a change in strategy.

“Retail shareholders would welcome any proposal that changes the status quo or bolsters investor confidence in management,” said shareholder Ken Lui, founder of an HSBC shareholder group.

“But why am I speaking out and supporting the spin-off proposal? Because I don’t trust the management,” he said.

During the COVID-19 pandemic in 2020, the group of shareholders urged HSBC to reinstate its dividend payment after canceling it following a request to Bank of England lenders.

HSBC’s comments on Monday represented its most direct defense since news of Ping An’s proposals broke in April.

China’s state-owned Shenzhen Investment Holdings Co is the insurer’s second largest shareholder and another state-owned entity, Central Huijin Investment, is among its top five shareholders, according to company filings.

A Hong Kong politician also urged HSBC to appoint Ping An representatives to its board. Read more

In 2016, HSBC decided to keep its headquarters in London, rejecting the option of moving it to its main profit-generating hub in Hong Kong after a 10-month review.

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Reporting by Selena Li and Anshuman Daga; Editing by Christopher Cushing

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