英 HSBC "Opposes Asia Branch Spin-off Demand by China's Largest Shareholder"

Ping An Insurance Persistently Demands Asian Branch Spin-Off
HSBC "Major Investors Oppose Due to Lack of Economic Feasibility"

[Image source=EPA Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The power struggle between China and the UK over the British multinational bank HSBC is intensifying. China’s Ping An Insurance Group, the largest shareholder of HSBC, has demanded the spin-off of its Asia branches, while British and American shareholders have opposed this move and raised suspicions of Chinese government interference. HSBC has downplayed these concerns, stating that Ping An Insurance Group’s actions have no political intent, but tensions surrounding HSBC show no signs of abating.

According to Sky News UK on the 1st (local time), Noel Quinn, CEO of HSBC, said at the Global Banking Summit hosted by the Financial Times the previous day, "The recent demand by China’s Ping An Insurance Group for the spin-off of Asia branches is inefficient, and other major shareholders and investors also oppose it," adding, "Key investors believe the spin-off lacks economic justification and could instead risk destroying substantial asset value."

Quinn’s remarks came after Ping An Insurance Group, which owns 8.29% of HSBC shares and is the largest shareholder, publicly demanded branch reductions and the spin-off of Asia branches in early last month, citing HSBC’s deteriorating performance and the need for cost-cutting. HSBC’s pre-tax net profit for the third quarter fell sharply by 42% year-on-year to $3.15 billion (approximately 4.52 trillion KRW), increasing pressure to reduce costs. In response to such demands, HSBC headquarters also announced plans to close 25% of its offline branches in the UK.

As Quinn indicated, the spin-off of Asia branches could significantly weaken HSBC’s competitiveness. Although HSBC is headquartered in the UK, it has operated primarily in Asian financial markets such as Hong Kong, Shanghai, and Singapore since its establishment in 1865. Even now, most of its major revenues come from its Asia branches.

Given this situation, strong suspicions of ‘intervention’ have been raised that the Chinese government, which has recently been in diplomatic conflict with Western countries such as the US and UK, is maneuvering Ping An Insurance Group to push for the spin-off. Sky News pointed out, "All key executives of Ping An Group are members of the Chinese Communist Party, and the group’s major shareholders are investment firms owned by the Chinese government," adding, "Former senior HSBC executives believe the Chinese government is behind the plan to spin off the Asia branches." Analysts suggest that the Chinese government aims to acquire these branches after the spin-off to expand its financial control in Hong Kong, Shanghai, and other locations.

HSBC, for now, denies any involvement by the Chinese government. CEO Quinn explained, "Based on all conversations with various stakeholders, I do not believe the demand is politically motivated." However, as relations between the UK and China continue to deteriorate, the power struggle surrounding HSBC is expected to persist.

Previously, relations between the UK and China began to sour significantly in 2020 following China’s enforcement of the Hong Kong National Security Law. According to the BBC, the Boris Johnson cabinet at the time opposed the law and pressured the Chinese government by stating it might formally recognize Taiwan as a sovereign state before 2025. The UK also strengthened foreign investment laws to block Chinese acquisitions of British companies and joined the European Union’s sanctions against China over human rights abuses in the Xinjiang Uygur Autonomous Region.