HSBC Holdings Inc (LON: HSBA) was in focus today after it brushed aside a proposal from an individual shareholder.
Here’s what Lui is demanding the bank does
Ken Lui – a Hong Kong based activist investor wants the financial services behemoth to spin-off its Asia business. Lui has a personal stake worth $12.7 million in HSBC.
On Monday, though, Chairman Mark Tucker recommended that shareholders vote against that proposal as it will lead to uncertainty for clients, employees and shareholders alike.
In fact, there will be significant cost over a number of years with material execution risks. So, it would not be in your interest to split the bank.
HSBC Holdings Inc is scheduled for its annual general meeting in Birmingham on May 5th. The news arrives more than a month after the investment bank reported its financial results for the fourth quarter (read more).
Lui may win support from HSBC’s largest shareholder
Lui also wants the London-headquartered firm to raise dividend payments to pre-pandemic levels. According to CEO Noel Quinn, the bank itself is committed to that as well but paying a fixed dividend is not financially viable.
Nonetheless, it may not be that simple for HSBC to disregard Lui’s proposals considering its largest shareholder, Ping An Asset Management, seems to be onboard with restructuring and higher dividends.
After a preliminary study of some of the resolutions proposed by HSBC shareholders, we believe that these resolutions will have a positive impact on improving performance and enhancing shareholder value.
The insurance giant based out of China owns 8.0% of the universal bank. Versus their year-to-date high, HSBC shares are down nearly 15% at writing.
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