HSBC’s largest shareholder calls for banking giant to break up

A branch of HSBC bank is seen, in central London August 3, 2009. REUTERS/Stefan Wermuth

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LONDON/SINGAPORE, April 29 (Reuters) – The biggest shareholder of HSBC Holdings (HSBA.L), Chinese insurance giant Ping An (601318.SS), has called for the London bank to be broken up, a report said. a source familiar with the matter said on Friday.

Ping An presented his plan to split the company to the HSBC board, according to earlier news reports, which also quoted people familiar with the matter.

“Ping An supports all investor reform proposals that can contribute to HSBC’s operations and long-term value growth,” a spokesperson said Saturday.

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HSBC did not comment on Ping An’s involvement but defended its overall strategy in a statement on Friday. “We believe we have the right strategy and are focused on executing it,” a bank spokesperson said by email.

The plan would unlock greater value for HSBC shareholders by separating its operations in Asia, where the bank makes most of its money, and other parts of its business, according to reports.

CEO Noel Quinn, who has led HSBC for more than two years, has doubled down on efforts in Asia by moving global executives there and pumping billions of dollars into the lucrative wealth management industry, emphasizing on the region.

Some analysts have also called on HSBC to split its global operations, arguing that the bank gets most of its money from Asia and its global network adds costs without delivering enough benefits.

HSBC has navigated escalating political tensions between China, Europe and the United States.

“The proposal makes some sense in a political context, but HSBC has a presence in both the West and Asia,” John Cronin, banking analyst at Goodbody, said Friday.

Reuters reported last year that Beijing had become disenchanted with HSBC over sensitive domestic and international legal and political issues, from the Chinese crackdown in Hong Kong to the US indictment of an executive of China’s national champion of Huawei Technologies technology. The executive was released last September.

In 2016, the bank decided to keep its headquarters in London, rejecting the option of moving its center of gravity to Hong Kong’s main profit-generating center after a 10-month review.

HSBC earned 52% of total revenue of $49.6 billion last year in Asia and 65% of its reported pre-tax profit in the region, with Hong Kong its biggest market. The bank is listed in both London and Hong Kong.

Ping An held an 8.23% stake in the banking giant as of Feb. 11, according to Refinitiv data.

British media first described the plan last week, without identifying the shareholder.

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Reporting by Lawrence White in London and Anshuman Daga in Singapore; Additional reporting by Iain Withers in London, Radhika Anilkumar in Bengaluru and Selena Li in Hong Kong; Editing by Arun Koyyur, Louise Heavens and William Mallard

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