HSBC’s largest shareholder outlines bank break-up strategy

HSBC’s largest shareholder ramped up pressure on the bank to break up its business on Tuesday, saying it was underperforming and has failed to “address key business model challenges”.

In a rare public statement, Chinese insurer Ping An said HSBC was lagging behind international peers and a recent improvement in performance was tied to rising interest rates, which have now peaked.

Ping An outlined revised proposals for restructuring that highlight HSBC’s precarious position as US-China tensions rise, with some observers doubting whether Europe’s largest lender can continue to straddle East and West.

“It is necessary for HSBC to push for structural reform to fundamentally address HSBC’s underlying market competitiveness issues,” Michael Huang, chairman and CEO of Ping An Asset Management, said in a statement.

Ping An last year suggested a series of ideas for HSBC to separate its business but Huang said the bank’s management had “exaggerated many of the costs and risks” associated with a split.

The previous proposals involved spinning off the bank’s Asia business into a separate entity listed and headquartered in Hong Kong, and a consolidation of the bank’s interests in the region, Huang said.

“HSBC Group has drained HSBC Asia of dividends and growth capital to support its relatively low return non-Asia businesses,” he added.

“In effect, HSBC Asia has been subsidising the group’s relatively low return non-Asia businesses.”

The revised proposals called for London-listed HSBC to engage in a “strategic restructuring” that would see it create a separately listed bank headquartered in Hong Kong.