Hong Kong Ping An Insurance Group defended its request to break off HSBC’s Asia division, saying it was not an activist investor.
Jessica Tan, Ping An’s co-CEO, told Reuters: “It’s a huge investment that we’ve made for seven years.”
Refinitiv data shows that Ping An owns 8.3% of HSBC, valued at $10.3 billion.
Tan: “Long-term returns are important.”
We’re not activists.
Ping An’s top management hadn’t spoken before Wednesday. The comments show the Chinese corporation won’t back down despite the lender’s opposition to a break-up.
HSBC didn’t immediately respond to Tan’s comments.
In April, Ping An put pressure on the London-based bank, which does most of its business and makes most of its money in Asia, to float its Asia unit in order to increase shareholder returns.
HSBC’s chairman and CEO were probed for more than an hour on dividends and growth during a Hong Kong shareholder meeting this month.
The fight with Ping An shows how hard it is for the British bank to deal with the political tensions between the U.S., Britain, and China, as well as the criticism of the bank’s actions in Hong Kong.
Ping An’s Chief Investment Officer, Deng Bin, told reporters at a results briefing on Wednesday that the insurer supports “all measures, ideas, and comments to improve” HSBC’s performance and efficiency.
As a long-term unit, we hope it improves. Deng continued, “The future rests with HSBC, and we support it.”
No institutional shareholders have openly backed Ping An’s desire to split HSBC.
A Hong Kong-based financial analyst says the lack of a clear reason and difficulties recruiting other owners prohibit the market from taking Ping An’s proposal seriously.
An analyst said that now that HSBC is more lucrative, it doesn’t make sense for Ping An to seek a separation.
EVERGREEN
HSBC says a break-up might hurt its credit rating, tax bill, and operating costs in the long term and poses immediate risks in implementing a spin-off or merger.
A source says that Ping An thinks HSBC exaggerates the risks of a possible spin-off, which would add $25 billion to $35 billion to the market value.
HSBC’s poor performance in recent years hurt the Chinese insurer’s holdings. HSBC’s Hong Kong shares fell 42% from their five-year peak in 2018, hurting Ping An’s investment income.
Ping An’s Hong Kong-traded shares increased 2.3% after its first-half profit was above estimates. HSBC fell 1.2%.
