By Ben Lucas
The ongoing row between HSBC and Chinese insurer Ping An continued today as HSBC hit back to defend its position that spinning off the bank’s Asia business would weaken the lender.
Ping An, which holds an eight per cent stake in the bank, has long argued in favour of hiving off HSBC’s Asian unit, which generates the vast majority of the lender’s profit.
In a rare public statement yesterday, the Chinese insurer said HSBC has “exaggerated many of the costs and risks” of a restructuring while refusing to “countenance any benefits”.
“We have been extremely disappointed by HSBC management’s consistent closed-minded attitude to all solutions,” Ping An said.
But HSBC said in a statement today that it has “considered in detail both the potential advantages and disadvantages” of such a move, discussing the matter “extensively” with Ping An.
“Structural reforms of HSBC’s Asia Pacific businesses suggested by Ping An would significantly dilute the international business model upon which HSBC’s strategy is based,” the bank said in a statement.
“This would result in a material erosion of earnings, returns, dividends and shareholder value, and a disruption to our unique global customer service proposition,” it added.
“HSBC is a global, systemically important bank. It is not in the interests of its shareholders, customers or stakeholders for HSBC’s structure to remain the subject of prolonged debate,” it said.
The heated exchanges come ahead of the bank’s AGM on 5 May where shareholders will vote on whether to commit the bank to provide regular updates on restructuring, including a spin-off of the Asian business.
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