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Following its rejection of Ping An's proposal for a breakup, HSBC seeks to appease Hong Kong investors

Image: Reuters Berita 24 English - The biggest market for Europe's largest lender, HSBC , will meet with retail investors on Tuesday in ...

Image: Reuters

Berita 24 English - The biggest market for Europe's largest lender, HSBC, will meet with retail investors on Tuesday in Hong Kong in an effort to persuade them that their plan to function as a global bank is essential to fostering growth.

The major shareholder of the London-based company, Ping An Insurance Group Co of China Ltd., is pressuring it to consider all options, including spinning off its core Asia business, in order to boost shareholder returns.

A day after HSBC rejected the break-up call, posted forecast-beating profit, and promised chunkier payouts, propelling its Hong Kong-listed shares to a one-month high, an informal gathering will be held to discuss earnings and strategy.

Since the proposal from Ping An became public in April, HSBC's answer has been its most forceful defence.

Amid early trading on Tuesday, before of the meeting, the lender's shares fell 0.2% in a 3.0% decline in the overall Hong Kong market.

Ping An, which has been increasing its holding in HSBC since 2017, when the bank's share price was nearly a third higher, has not officially called for the division of the company, but it has stated that it supports all reform ideas that might help raise the company's long-term value, HSBC Holdings PLC.

By early February, the insurance had 8.23% of HSBC under its ownership.

When HSBC eliminated its dividend in 2020 during the COVID-19 epidemic as a result of a request made to lenders by the Bank of England, Hong Kong retail shareholders were especially dissatisfied.

Ken Lui, a shareholder and the leader of an HSBC shareholder group, stated that "retail shareholders would welcome any recommendations that modify the status quo or increase investor trust in management."

"But why do I speak up and back the spin-off idea? Considering that I lack faith in management, "said he.

A Hong Kong legislator has also pushed HSBC to return its headquarters to Hong Kong and put Ping An's representatives to its board.

Christine Fong, a district council member from Hong Kong who would attend the meeting with HSBC, told Reuters, "We do fear if the Bank of England may compel HSBC to halt dividends again in the next wave of the pandemic."

"HSBC will be less impacted by UK political issues and legislation if it relocates to Hong Kong."

After a 10-month investigation, HSBC opted against moving its primary profit-generating base back to Hong Kong and instead to maintain it in London in 2016.

Noel Quinn, the chief executive of HSBC, told reporters on Monday that there would likely be a conflict of interest if the bank appointed a Ping An executive to its board.

Given that their business model in terms of insurance and banking overlaps with ours, there could be a conflict of interest, according to Quinn.

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