Written by: Hong Kong 01
2020-04-06 06:00Date of last update: 2020-04-06 06:00
HSBC Holdings, the parent company of HSBC Bank, which is closely linked to Hong Kong, announced the withdrawal of the dividend payment decision for the fourth quarter of 2019 last week due to the pressure of the Bank of England's "prudential wealth management", and predicted that there will be no dividends or Repurchase. As soon as the news came out, it caused uproar among Hong Kong people. For many Hong Kong people, HSBC dividend payouts are as inevitable as the sun rises from the east. A sound dividend policy has also made many Hong Kong people consider investing in HSBC stocks their first choice for retirement plans. This time HSBC's decision to withdraw its dividend payout is a thunderbolt for all the "interest-bearing" retirees, especially the fourth quarter of last year's dividend was removed in February this year. Many people discussed whether this move is illegal, and there are small shareholders Organize the alliance to "protect rights".
In fairness, the dividend payout of a listed company is an enterprise decision. The key lies in whether the company is profitable. If the company has operational difficulties, it cannot always force it to continue paying dividends. However, HSBC is not without profit. Although the world economy is facing significant pressure, HSBC still has sufficient funds. The core tier 1 capital adequacy ratio is 14.7%, which is nearly double the 2008 financial tsunami. Obviously, the risk of "burst" Not seen, the Hong Kong Monetary Authority has also clarified that it has not prevented banks from paying dividends. In fact, it is the decision of the Bank of England and the European Central Bank to protect the region ’s economy under the impact of the New Coronary Pneumonia epidemic that requires banks not to pay dividends. However, the profits of HSBC mainly come from Hong Kong business, and the shareholders are mainly Hong Kong and Asia. The decision to withdraw dividend payouts, succumbing to political pressure from the British authorities, ignored the interests of Hong Kong shareholders who had been with them for many years.
HSBC has a deep relationship with Hong Kong. HSBC was established in Hong Kong, made its name in Hong Kong, became famous in Hong Kong, and lived with Hong Kong for a century and a half. It has already become one of Hong Kong's symbols and is Hong Kong's first local "brand" to enter the international arena. Similarly, Hong Kong has brought huge returns to HSBC. Regardless of whether HSBC's main business in the early days was based in Hong Kong, providing remittance and guarantee services between mainland China and the UK, even though HSBC has become a multinational enterprise today, most of its profits still come from Hong Kong.
HSBC is the first local "brand" to enter the international arena in Hong Kong. (Profile picture)
Century rights issue is a betrayal for a hundred years of hardship
Many people in Hong Kong still have fresh memories of HSBC's "central rights issue" after the financial tsunami. At that time, HSBC lost money on the US subprime mortgage and suffered a loss of up to US $ 15.5 billion. It was forced to raise funds by rights issue to raise capital. The management appealed to the Hong Kong shareholders who held more than 20% of the shares for help. As a result, many Hong Kong people spent a lot of money on the rights issue to overcome the difficulties and keep this Hong Kong "lion". Now that HSBC has sacrificed the interests of a large number of Hong Kong shareholders to help the United Kingdom solve its difficulties without seeing serious setbacks in its business, how can it teach Hong Kong people not to be angry?
On the other side, in the Bank of England's prudential financial management notice, in addition to expecting the bank not to pay dividends, it also pointed out that the bank should stop paying bonuses to high-level officials, but HSBC did not respond clearly. This can't help but remind people of the ridiculous past that the top financial institutions that triggered the financial tsunami can still receive huge bonuses safely after the disaster. HSBC did not hesitate to start operations on shareholders, but it seemed to have concerns about high-level bonuses, but it also made people question the rationality of stopping dividends.
Hong Kong people saw the actions of HSBC in the eyes, just like the revenge of enemies, they immediately renewed the discussion on whether HSBC should move back to Hong Kong. Although HSBC was established more than 100 years ago, it was not until 1991 that a holding company was formally established. At that time, it was already an established fact that Hong Kong ’s sovereignty would return to China in 1997, but Hong Kong society was full of worries about the mainland ’s political environment, and many people emigrated abroad. HSBC ’s major shareholders and investors also worried about Hong Kong ’s prospects. Acquired the Bank of England Midland, and under the British regulatory requirements, the holding company was established in the United Kingdom, which was considered relatively stable at the time.
Many Hong Kong people spared no expense to issue rights shares to keep this Hong Kong "lion". (Profile picture / Photograph by Jiang Zhiqian)
Time is changing, and the uncertainty of Hong Kong is eliminated after the return. After nearly 30 years of experience, HSBC still depends on Hong Kong. Its business and profit are mainly in Hong Kong and Greater China. According to HSBC's 2019 annual report, 49% of its accounting benchmark revenue comes from Asia, whereas Europe only has 29%, indicating that most of its business is in Asia rather than Europe. In terms of profitability, Hong Kong alone brings HSBC ’s pre-tax profit of US $ 12.049 billion, while HSBC ’s full-year pre-tax profit is US $ 13.347 billion. In contrast, even after deducting the overall expenses of the holding company, the pre-tax profit of the UK's banking business was only $ 1.17 billion, and the profit of Hong Kong was more than ten times that of the UK.
Bank of America Securities issued a briefing after HSBC's decision to withdraw dividends. In addition to its business and profitability, 28% of HSBC's shareholders are retail investors in Hong Kong, and 11% are mainland individuals. It is estimated that its proportion exceeds that of UK shareholders. In addition, the largest shareholder of HSBC is the asset management company BlackRock, and the second largest is China Ping An with a shareholding of about 7%. Bank of America Securities stated that the development momentum of the Asian region is far greater than that of the developed Europe and the United States. It is not timely for HSBC to continue to stay in the UK. It should be moved back to Hong Kong to concentrate on business in Greater China and Asia.
Should I be a British multinational bank or a Hong Kong multinational bank
In fact, in recent years, under the pressure of Brexit and the economic recession in Europe, the prospects of the United Kingdom are unknown, and the call for HSBC to move back to Hong Kong has been heard from time to time. In 2016, HSBC had discussed this and finally rejected it, citing the UK ’s “regulatory structure And the judicial system are internationally recognized. " However, Hong Kong and London are both mature international financial centers, and the above reasons are obviously insufficiently persuasive.
Whether or not an enterprise relocates its books is basically a market activity, but from the development history of HSBC, it can be seen that political wrestling is inseparable. It can be seen from the performance of HSBC that Hong Kong has brought huge returns to it, and HSBC has repeatedly stated that Hong Kong and Asia are regarded as development centers; on the other hand, the UK may not necessarily provide HSBC with favorable business conditions than Hong Kong. . Perhaps there has been no obvious motive in the past, prompting HSBC to spend a lot of money to move its headquarters back to Hong Kong, but the British regulator's brutal prevention of dividends just happens to be an opportunity for HSBC management to seriously consider whether it is wise to continue to stay in the UK. After the "dividend payout" incident occurred, there were rumors that there was dissatisfaction within the management of HSBC, and some people even proposed to rethink the move back to Hong Kong.
Under the pressure of Brexit and the economic recession in Europe in recent years, the UK's prospects are unknown, and calls for HSBC to move back to Hong Kong have been heard from time to time. (Getty Images)
Obviously, HSBC did not move the book back to Hong Kong not because of the lack of "interests" on the Hong Kong side, but because Hong Kong was not good at using resources to reasonably put pressure on it, making HSBC understand the importance of moving the book back to Hong Kong. In 2016, HSBC set the strategic focus of "London-based and Asia-based", which sounds gorgeous, but it actually reflects that Hong Kong has always been too "benevolent" for it, and the market understands it a little. There is no difference between "inside and out". Many Hong Kong stockholders have been silently supporting the expectation of a stable dividend for HSBC. Retail investors holding HSBC stock have been complaining recently, but even if they are dissatisfied, they can only sell HSBC stock at best. However, when the holding price of foreign exchange holdings was much weaker, many stockholders had already become "share crabs". Although selling at this moment can vent their dissatisfaction, they have to suffer financial losses.
In any case, a dividend recovery turmoil allows Hong Kong people to see the problem of HSBC being thousands of miles away. When a company whose business and profit are mainly based in Hong Kong is supervised by the British government, the UK not only protects its own interests, but also protects its own interests. Influencing the operation of the company, it does not hesitate to sacrifice the interests of many small shareholders in Hong Kong. The business of a multinational enterprise can reach every corner of the world, but it always has its roots. Hong Kong people should ask whether the HSBC is a multinational financial institution mainly serving the United Kingdom, or is it a bank that has been operating with virtue of Hong Kong's advantages? The answer is obvious. In this case, HSBC should decisively move back to Hong Kong, and it is right to be a financial giant with Hong Kong as the center and facing the world.
Is HSBC a multinational bank that mainly serves the UK, or is it a bank that has managed to take advantage of Hong Kong's advantages? (Profile picture)
The Hong Kong government may wish to punish morals and urge HSBC to move back to Hong Kong
As the so-called "clear officials are difficult to break down housework", non-government investors can buy the wrong shares. However, HSBC ’s withdrawal of dividends this time revealed that the issue of mutual trust between enterprises and stockholders was not so simple, but reflected that when the lifeblood of giant enterprises closely related to the interests of Hong Kong society is in the hands of others, The Hong Kong society is not only helpless about the unreasonable intervention from the perspective of local regulatory standards, but even watching the Hong Kong people deprived of their due interests. Needless to say, the Hong Kong government is to blame. It is precisely because the government has long embraced the doctrine of laissez faire, the lack of determination to proactively safeguard Hong Kong ’s core interests, and the strategic thinking used to plan economic and industrial development.
The ancient Chinese book "Han Fei Zi" mentions that the Ming dynasty who controlled his subjects should make good use of the "two punishments for morals". The importance of HSBC to Hong Kong is self-evident, but to embody its "Hong Kong value", it is the best choice to move back to Hong Kong. In this regard, Hong Kong is not without checks and balances, nor with reasonable pressure. For example, HSBC is currently one of the main transaction banks used by the government, which involves a lot of cashiers and financial services, bringing a stable income to it. To put it bluntly, there is no reason for the Hong Kong Government to continue to maintain such a relationship with a bank that is betraying the interests of Hong Kong people. What's more, HSBC's development focus has always been in Greater China and Asia, which also gave the Hong Kong government more bargaining chips, let HSBC understand the stakes, and urge it to move back to Hong Kong as soon as possible. In the final analysis, since the focus of HSBC's business is in Hong Kong, it is the proper meaning to truly be based on Hong Kong, rather than being constrained by the United Kingdom to rescue the British "national crisis".
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