BCS - HSBC chair makes case for rejecting proposals on Asia unit spinoff dividend

2023-04-03 12:03:07 ET

HSBC Holdings ( NYSE: HSBC ) Chairman Mark Tucker told a group of shareholders in Hong Kong that the board wants shareholders vote against shareholder proposals to restructure the bank and pay fixed dividends because they would hurt the Asia-focused bank's costs and clients.

Ken Lui, an individual HSBC ( HSBC ) shareholder who's leading a Hong Kong-based investor group, has urged the company to break up the bank. A second proposal would restore the company's dividend to pre-COVID-19 levels.

Tucker, who said the board's recommendation was unanimous, explained that a spinoff or restructuring of the company's Asia business, as set forth by Lui, would spark a significant period of uncertainty for clients, employees and shareholders, Reuters reported.

"In fact, there will be significant cost over a number of years with material execution risks," he said. "So it would not be in your interest to split the bank."

The informal meeting of investors in Hong Kong took place ahead of the bank's annual general meeting in the U.K. city of Birmingham on May 5.

Lui's proposal for a spinoff resembles calls from Ping An Insurance ( OTCPK:PNGAY ) ( OTCPK:PIAIF ) to break up its Asia business to generate additional returns for shareholders. In November, Ping An said the company should aggressively cut costs.

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