…By Lola Smith for TDPel Media.
Ping An, the Chinese insurer and HSBC’s largest shareholder, has failed in its latest attempt to spin off the bank’s Asian arm.
The company’s management had argued that this would not represent the best value for shareholders, but Ping An has repeatedly called for the split.
The insurance business and HSBC Chair Mark Tucker lobbied shareholders to vote with them ahead of the bank’s recent AGM, but only 19.8% of voting shares were cast in favour of the proposal to review HSBC’s strategy and provide regular updates on the aims of its Asian business.
According to HSBC’s board, Ping An represented between 18% and 19% of voting shares at the meeting, meaning it gained little support otherwise.
Tucker claimed victory after the AGM, saying it was time to “draw a line under” the debate.
Over 20% of votes were cast against the bank’s director pay policy, with the vast majority also coming from Ping An.
Before the AGM, Tucker had urged shareholders to reject Ping An’s resolutions, arguing that the bank’s current strategy was working and improving its performance.
He said that shareholders should not put this at risk and that the best way to protect and grow shareholder value was to continue with the current strategy.
Analysis and Commentaries
The failed attempt by Ping An to spin off HSBC’s Asian arm highlights the divergent views of stakeholders on the bank’s future direction.
The Chinese insurer, which has a significant stake in HSBC, has been pushing for the spinoff for some time, arguing that it would unlock value for shareholders.
However, HSBC’s management has resisted the move, claiming that it would not be in the best interests of investors.
The fact that only 19.8% of voting shares were cast in favour of the proposal suggests that most shareholders agree with HSBC’s management.
The bank’s current strategy appears to be working, and there is little appetite among investors for a radical change in direction.
The bank’s board has a clear responsibility to protect and grow shareholder value, and it has concluded that the best way to do this is to continue with the current strategy.
The failed resolution also shows the growing influence of Chinese investors in HSBC.
Ping An is the bank’s largest shareholder, and its views on the bank’s future direction cannot be ignored.
However, the fact that it failed to secure significant support for its proposal suggests that it may need to rethink its approach to influencing the bank’s strategy.
Overall, the failed attempt by Ping An to spin off HSBC’s Asian arm highlights the challenges that the bank faces in meeting the diverse expectations of its stakeholders.
It also shows that the bank’s current strategy is working, and there is little appetite among investors for a radical change in direction.
The challenge for the bank’s management is to continue delivering strong results while addressing the concerns of all stakeholders, including its largest shareholder.