Shares in HSBC Holdings climbed higher in Hong Kong on Tuesday after its largest stakeholder, Chinese insurance giant Ping An, sought a break-up of the London-headquartered bank.
HSBC shares added 1.85% in morning trade, outperforming a flat local market. The Hong Kong bourse was closed on Monday for a holiday.
Ping An had urged HSBC to look at options, including spinning off the Asian business, where it earns the majority of its revenue, or taking other steps to increase its valuation, sources said on Friday.
“That Asia makes up the majority of HSBC’s revenues suggests that a spin-off may be logical, but it needs to be balanced by the fact that a significant portion of that is the result of HSBC’s global footprint bridging East and West,” said Justin Tang, head of Asian research at investment advisory firm United First Partners.
HSBC has not commented on Ping An’s involvement but defended its overall strategy in a statement, saying that it believed it had the right strategy and was focused on executing it.
Ping An said on Saturday it supports all reform proposals from investors that could help with HSBC’s long-term value growth. Ping An owned an 8.23% stake in the banking giant as of February 11, according to Refinitiv data.
HSBC’s Hong Kong-listed shares have surged about 80% since plunging to 25-year lows in September 2020.
Buybacks Plan Shelved
However, it shelved plans last month for fresh stock buybacks this year after reporting an unexpected hit to its capital as a cocktail of rising inflation, geopolitical drama and economic weakness dented its prospects.
HSBC chief executive Noel Quinn, who has run the bank for the past two years, is ploughing billions into Asia to drive growth, with a focus on wealth management, and has also moved global executives there.
Some analysts have previously also called for Europe’s largest bank to split its global business, arguing that its global network adds costs without delivering enough benefit.
But this is the first time its biggest shareholder has made such a proposal.
British media reports first described the plan last week, without identifying the shareholder.
- Reuters with additional editing by Jim Pollard