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Bond Market News

HSBC, Ping An to Discuss Strategic Breakup Proposal of Asia Business

May 5, 2022

HSBC and Ping An executives plan to meet in mid-May to discuss the latter’s proposal that HSBC should explore strategic options such as a spin-off of its Asian business, as per a source. Business Times notes that Ping An is the biggest shareholder in HSBC with an 8.23% stake as of February 2022. The Chinese insurer has called for the bank to boost returns via a strategic breakup of its businesses. It said that it was in support of all reform proposals to increase HSBC’s long-term value. While HSBC did not comment on Ping An’s proposal, it defended its existing structure during its earnings release. BT notes that some investors are skeptical of a breakup as recent years have seen UK, Europe and US businesses’ earnings disappoint, coupled with the notion that there was no guarantee of increasing returns with a breakup. Some analysts note that an Asian demerger could lead to higher costs of capital in the long-term, wiping out any quick gains emerging from new listings.

HSBC’s 6.375% Perp was down 0.2 points to 100.31, yielding 6.25%.

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