Aug 11, 2022
Ping An reinforces campaign to break up HSBC
HSBC's largest shareholder Ping An has reinforced its campaign to break the bank up, rejecting executives' recent arguments that a split would take too long, cost too much and damage earnings from its global network. Chinese insurer Ping An, which owns 8.4 per cent of the stock, claims that a spin-off of its Asian business would create between $25bn and $35bn of additional market value by releasing its lucrative Hong Kong operations from the drag of the rest of the world, where HSBC is far less profitable, according to a person familiar with its thinking. Analysts at Ping An believe that a break up could release the lender from $8bn in additional capital requirements imposed on so-called global systemically important banks, the person said. "HSBC's Asian business continues to deteriorate and its revenues and profits have been declining for the past two years," the person close to Ping An said, pointing to its lower valuation and higher cost:income ratio than its majority-owned Hong Kong retail banking subsidiary, Hang Seng, and emerging market-focused rivals such as DBS in Singapore. The Financial Times reported in July that HSBC is the first foreign lender to install a CCP committee in its investment banking subsidiary in the country, a move that underlines the tension facing the bank as it tries to navigate between Beijing and the west.
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