HSBC shareholders push for eventual full break-up of bank

A plan by the new boss of HSBC to split the bank’s operations internally between East and West has led to fresh calls for the sprawling lender to pursue a full break-up.
Georges Elhedery, who became HSBC’s chief executive last month, is aiming to simplify the group through an overhaul he unveiled on Tuesday that includes creating standalone divisions for its Hong Kong business and the bulk of its UK operations and the partition of other businesses into Eastern and Western market regions.
The idea is to streamline the FTSE 100 bank and cut costs but it has also led to renewed scrutiny of the geographic pressures facing the business and fuelled questions about its future.
Rajiv Jain, whose investment firm GQG Partners is a top 20 shareholder in the lender, told the Financial Times he believed that “HSBC may have lost their way trying to be everything” and that “you’re trying to straddle two horses which are heading in different directions”.
He said the “direction” for HSBC “should really be an eventual break-up”. Such a move has been proposed by other shareholders as recently as last year but was fiercely opposed by the bank.
While based in London, the lender’s origins are in Hong Kong. It makes most of its money in the former British colony and looks to mainland China as a major engine of its growth, as well as having a big business in the UK and operations in Europe and the Americas.
As a result, the bank has increasingly found itself stuck in the middle of rising geopolitical tensions between China and the West in recent years.
This prompted Ping An, a Chinese insurer and leading shareholder in HSBC, and some other individual investors in Hong Kong to start campaigning two years ago for the lender to formally split itself in two by spinning off its Asian business into a separately listed company.
Ping An had argued that the bank’s share price was being dragged down by geopolitical pressures and that this would be resolved by a break-up. Mark Tucker, the HSBC chairman, and Noel Quinn, Elhedery’s predecessor, warned that a formal separation would actually destroy shareholder value. The rebel investors forced a vote on the issue in May last year but were defeated when most other shareholders sided with HSBC in opposing a break-up.
Ping An and HSBC did not comment.