Three of HSBC's most senior executives have urged minority shareholders in Hong Kong to reject a proposal to raise dividend payouts and consider a radical structural overhaul to enhance the bank's value which would include spinning off its Asian operations.
For the second time in eight months, UK-based HSBC chairman Mark Tucker and CEO Noel Quinn flew in to host an informal meeting alongside Hong Kong-based Asia-Pacific chairman Peter Wong Tung-shun with over 1,000 shareholders packed into a convention hall in Kowloon Bay.
In their opening speeches, all three senior bankers repeated the HSBC board's suggestions last month urging shareholders to reject two resolutions at the forthcoming annual general meeting for the lender to pay a higher dividend and split its Asian business.
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"The board has a clear responsibility to protect and grow shareholder value. The first way to do that is to continue with our current strategy," Tucker said.
"So let me end by repeating our advice to you: We strongly encourage you to vote against the resolutions."
Several shareholders who spoke at Monday's meeting supported the two resolutions made by the Hong Kong-based "Spin Off HSBC Asia Concern Group" in March. They demand the bank restore its annual dividend to a pre-pandemic level of at least 51 US cents a share and urge the executives to consider how to improve the performance of HSBC including the possibility of separating its Asian and Western operations.
"HSBC has made most of its money from Asia while it has suffered losses in the west. I will call for all shareholders to vote for the resolution for it to split up its Asia business," said district councillor Christine Fong Kwok-shan at the meeting.
Shareholders of HSBC will vote on May 5 on the two proposals - and 16 others besides - at the bank's annual general meeting in Birmingham, England.
The special resolutions will require 75 per cent of the vote to pass. It is a difficult target for the local minority shareholders as the largest HSBC shareholders did not agree to the split.
"I do not believe [increasing] dividends is financially sensible or workable. We intend to get back to pre-Covid levels as soon as possible," Quinn said. "A dividend payout ratio is a much more balanced approach and the model that is widely used across the industry."
Ken Lui Yu-kin, the leader of the "Spin Off HSBC Asia Concern Group", said his group is contacting the 20 largest shareholders of HSBC including Ping An Insurance, urging them to vote for its resolutions.
He struck a confident tone.
"I believe the major shareholders will support the resolutions as they will be benefit from higher dividends and also a restructuring of the bank," said Lui, whose HSBC shares are worth over HK$100 million (US$12.5 million).
"As a shareholder, I am not happy with HSBC's recent decision to take over the UK unit of Silicon Valley Bank in just five hours," he said.
Quinn, however, said the deal with SVB will help HSBC to develop its fintech business.
Lui's campaign came after mainland China's Ping An Insurance Group, HSBC's largest shareholder with a 9.2 per cent stake, last year pushed for the bank to spin off its Asia business for a separate listing in Hong Kong. No representative from Ping An showed up at the informal conference on Monday.
Ping An Asset Management, a unit of Ping An Insurance, said in an emailed statement on Monday: "We believe that these resolutions will have a positive impact on improving performance and enhancing shareholder value. We hope HSBC can remain open and value the suggestions from shareholders."
Even though the bank resumed paying dividends to its shareholders in 2021, those who spoke to The Post at Monday's meeting still expressed anger and frustration at the bank's decision to cancel dividends in 2020.
"I am here today to ask them why they did that. How can they go back on their word after announcing the dividend payouts?" said Tom Chan, 73.
The retiree who formerly worked in telecommunications said that he had been investing in the bank for over 50 years, and that his wife sold her shares after the bank cancelled her dividends.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.