An HSBC Holdings Plc activist shareholder in Hong Kong is pushing the lender to allow investors to vote on a plan that requires the bank to provide regular updates on the restructuring of its Asian operations and to restore dividend payouts.
(Bloomberg) — An HSBC Holdings Plc activist shareholder in Hong Kong is pushing the lender to allow investors to vote on a plan that requires the bank to provide regular updates on the restructuring of its Asian operations and to restore dividend payouts.
Ken Lui, leader of the “Spin Off HSBC Asia Concern Group,” said that he has hired a law firm, which reached out to the bank last week with the names of 100 shareholders to request that two resolutions be up for a vote at the May 5 annual general meeting.
“I hope they can allow every shareholder to vote for what they believe in instead of just letting the HSBC management close the door to make all the decisions themselves,” Lui said in an interview.
Lui’s group is asking the bank to restore dividend payouts to at least 51 cents a share each year and provide quarterly updates on a strategy to increase value through a reorganization or spin off of its Asian businesses. The move adds further pressure on the London-headquartered bank, which is fending off an effort by its top shareholder Ping An Insurance Group Co. to radically revamp the lender.
“As with any proposed shareholder-requisitioned resolution, the shareholders will need to demonstrate that the requisition is valid before it can be formally accepted,” said a spokesman for HSBC. “We will respond at the appropriate time.”
According to the UK companies act, a company is required to give notice of a resolution once it has received requests from at least 100 shareholders, each holding shares with an average paid up sum of at least £100 ($120).
A spokeswoman for Lui said that the bank has informed them that the proposal needs to be submitted as a special resolution, which require at least 75% of votes cast in favor to be passed, higher than 50% needed for ordinary resolutions.
Since the rift became public last year, HSBC has taken more steps to refocus its business in Asia, striking a deal to sell its Canadian operations for C$13.5 billion ($10 billion) and last month announced a plan for a special dividend as well as a return to quarterly payouts. Despite that, there are few signs that the campaign to split the bank is going away.
Under pressure from UK regulators, the lender canceled its quarterly dividend during the pandemic, angering its large Hong Kong investor base.
The Asia region contributed to about 60% of HSBC’s adjusted pretax profits for 2022.
“It makes sense and is fair for them to talk about the structural change including spinning off Asian market to release more value,” said Lui.
HSBC senior executives have previously pushed back on calls to break up the bank, citing the complexities and length of time it would take, to the potential loss of access to US dollars. The lender also sees its global reach as a key part of its business to position itself as a financing bridge between Asia and the rest of the world.
Lui said that if HSBC accepts the resolutions, he plans to visit the top 20 institutional shareholders to lobby them for support.
(Adds comment from bank and Lui’s spokeswoman in fifth and seventh paragraphs)
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