Recently, HSBC's fund shareholders have proposed that they hope that the board of directors will agree to split the bank into two and spin off the Asian business in order to release a larger valuation.
However, some fund managers and scholars believe that although the spin-off will increase the value of the Asian business, it will also cause damage to the value of other businesses. Its characteristics and play space.
HSBC (0005) has been repeatedly involved in the whirlpool of political tensions between China and the United States in recent years. In addition, the bank's business performance outside Asia is still fading. From time to time, the business in Asia is required to "save the whole family". Dismantle the voice of Asian business.
Recently, a British newspaper reported that a fund shareholder who claimed to be an "active shareholder" of HSBC proposed that the board of directors of HSBC split the bank into two and set up a Hong Kong-listed company headquartered in Hong Kong and focusing on Asian business to avoid Geopolitical risks release greater valuations.
HSBC will hold a general meeting of shareholders in London on Friday (29th).
HSBC Central Head Office.
(Photo by Liang Pengwei)
Long-term reliance on Asian business RoTE is lower than average
The "active shareholder" is an institutional investor, but did not disclose his shareholding.
The shareholder criticized HSBC's past performance, saying that the management could not achieve the core target of strategic upgrade proposed on February 18, 2020, and in addition to reducing the target of return on tangible shareholders' equity (RoTE), it also increased the operating expenditure target for 2022.
HSBC has been criticized for relying on business in Asia for many years to support the group's performance.
The fund shareholder also cited data that HSBC's RoTE was below average compared to its peers with a higher exposure to Asia.
Fund shareholders believe that the spin-off of the Asian business will help unlock a greater valuation, which will allow investors to flexibly decide on the holdings of HSBC's Asian and non-Asian businesses and conduct independent valuations.
The spin-off will also help HSBC Asia free itself from the burden of non-Asian operations, and the valuation of employees' stock and options will be greatly improved, which will also help attract and retain talent.
They even believe that Hong Kong as the headquarter of Asian business will help consolidate and enhance Hong Kong's status and competitiveness as an international financial center
On the other hand, fund shareholders believe that the spin-off will help HSBC avoid political risks.
They said it would be increasingly difficult for HSBC to strike a middle ground between China, Europe and the United States as geopolitical risks intensify and it faces enormous challenges for global banks.
They even believed that the urgency of the split was more prominent in the Russia-Ukraine incident, saying that it was impossible for HSBC to take a middle position.
HSBC was involved in sanctions over the Huawei Meng Wanzhou case.
(AP)
Pang Baolin: Political ecology "black and white" cannot escape sanctions
Pang Baolin, managing director of Dongji Fund Management Co., Ltd. believes that if the Asian business is split, it will theoretically help HSBC to avoid risks, but in fact, under the current geopolitical ecology, it can be described as "black or white" and there is no neutrality Sanctions may also be imposed after a spin-off due to parent or subsidiary relationships.
Furthermore, although HSBC is registered in the UK, most of its profits come from the Asian region, and the outside world would not regard HSBC as a local bank in the UK, so it used the spin-off business to avoid risks. Do it in vain."
As for Li Zhaobo, an honorary teaching and research scholar of the Asia-Pacific Business Institute of the CUHK Business School, he also agreed that the spin-off of the business has limited effect on risk aversion. If the spin-off HSBC Asia is not regulated by Europe and the United States, it will also be recognized , security has a negative impact.
Li Zhaobo believes that HSBC has been focusing on development in Asia with its European management team, which is a major feature of the bank.
The picture shows Qi Yaonian, CEO of HSBC Group, visiting Telford Garden Branch.
Li Zhaobo: spin-off or loss of foreign capital "halo"
Li Zhaobo pointed out that HSBC's role as a foreign bank and its focus on developing its business in Asia through a team of European managers is a major feature of the bank.
Although the spin-off is beneficial to further reflect the value of its Asian business, at the same time it reflects the limited value of the bank's European business, which will cause damage to it and is more likely to lose the "halo" of a foreign bank.
Taking Huawei as an example, Li Zhaobo pointed out that in the Meng Wanzhou incident, HSBC was indeed affected by the political rivalry between China and the United States, but at the same time, it is difficult for a large Chinese-funded company like Huawei to have any other banks except HSBC. Positioning is suitable for serving Huawei, which is exactly the characteristic of HSBC.
Or re-assess the material split opportunity
Li Zhaobo believes that judging from HSBC's decision not to relocate to Hong Kong in the past, he believes that there is little chance of spinning off its Asian business in the short term.
However, since HSBC has had to pay huge fines due to regulatory issues in various places in the past few years, he estimates that its regulatory team will conduct a separate assessment and conduct a simulation test of the old structure and the new structure to assess which structure is more affected by regulation. to make the most appropriate decisions and plans.
Pang Baolin also believes that there is little opportunity for spin-off. At present, HSBC's business in Europe is relatively small. If it is split, there will be little left in other businesses.