Chinese insurer Ping An owns 9.2pc of HSBC and wants the bank broken up
HSBC has come out fighting against calls by its largest shareholder for a break-up of the banking giant as it claimed the move would be costly and risky.
The London-based lender warned that a spin-off or demerger of its Asian business could jeopardise profits and growth, with the risk of hefty one-off costs, higher taxes, big running costs and possible regulatory issues.
Group chief executive Noel Quinn instead looked to appease its activist shareholder – China's Ping An Insurance Group – by vowing to return shareholder dividend payouts to pre-pandemic levels.
HSBC is under pressure from Ping An, which owns around 9.2pc of HSBC's shares, to spin off its burgeoning Asian arm from the UK business.
Mr Quinn said that, having sought independent advice on the matter, it concluded that a break-up "would not achieve increased value for shareholders".
He said so-called alternative structural options would have a "material negative impact on value".
"Our current strategy is the safest way to get to the highest returns and dividends we all want to see."
He also stressed that its "internationalism remains the most defining characteristic of our identity".
The comments came as HSBC reported a 15pc, or $1.7bn (€1.66bn), drop in first-half pre-tax profits to $9.2bn as it joined rivals in setting aside cash to cover potential loan losses, booking a $1.1bn charge.
It said this partly reflected "heightened economic uncertainty and inflation" as soaring cost pressures hit the UK and wider global economy, while it cautioned that impairment charges are set to rise over the second half.
But the profit out-turn for the second quarter was better than expected and the group promised it will revert to paying quarterly dividends next year, helping shares lift 7pc.
The Bank of England lifted a pandemic ban on UK lenders paying out dividends in July last year. Ping An has argued that Asian investors felt cheated out of their dividend.
HSBC makes most of its profits in Asia. The bank's board will meet with retail investors in Hong Kong today.