HSBC’s board has unanimously recommended that shareholders vote against proposals to restructure the bank and pay fixed dividends. The call comes after Ken Lui, a Hong Kong-based investor group leader and an individual shareholder of HSBC, demanded that the bank be broken up. Meanwhile, Mark Tucker's proposal calls for the restoration of pre-COVID-19 dividend levels.
The resolution on the docket for its annual general meeting in May would force HSBC to come up with a plan to spin off or reorganize its Asian business. However, Chairman Mark Tucker and CEO Noel Quinn have defended their strategy, stating that such alternatives would “materially destroy value for shareholders,” including dividends.
At Monday's meeting with investors in its largest market, Tucker and Quinn answered questions about issues ranging from how they were approaching demands for an overhaul of their business to their purchase of Silicon Valley Bank’” UK arm. Investors have been unhappy with HSBC scrapping its dividend in 2020 at the request of British regulators.
Ping An (PNGAY), which holds an 8% stake in HSBC, has backed calls for restructuring but is also facing pressure from shareholders who believe breaking up or spinning off parts of the bank could create uncertainty among clients.
The resolution will require 75% of votes to be passed in May; however, according to Chairman Tucker, "nothing is impossible."