By Sinead Cruise and Lawrence White
LONDON (Reuters) – HSBC investors should vote against proposals calling for a strategic review and dividend policy revamp, shareholder adviser Glass Lewis has said, deepening divisions between factions of the bank’s ownership ahead of its annual meeting on May 5.
Glass Lewis said the proposals, filed by individual shareholder Ken Lui in Hong Kong and backed by the bank’s biggest investor, Ping An, are “not in shareholders’ interest”.
A source close to Ping An, HSBC’s top investor, on Monday said the Chinese insurer was minded to back Lui’s resolutions, which demand HSBC restore dividends to 51 cents per share and provide regular updates on strategy, including the possibility of spinning off its Asia business.
“In our view, the board’s strategy and plans appear valid and are likely to result in greater returns and value, on a risk and cost-adjusted basis, than the overly prescriptive and, in our opinion, unnecessary proposals submitted by the proponent,” Glass Lewis said in a note to clients seen by Reuters on Tuesday.
The contrasting positions among HSBC shareholders reflect a deep divide over the direction of Europe’s biggest bank, which has struggled in recent years to deliver on long-term profit targets and lift its share price.
Since Ping An began pushing for the Asia spin-off last November, the bank has tried to accelerate plans to exit retail banking in underperforming Western markets such as France and Canada, seeking to deliver on a promise to ‘pivot’ to Asia.
The Chinese insurer, with an 8% shareholding in the bank, would not be able to force a break-up on its own and has so far shown little evidence that it has convinced other large institutional backers of HSBC that its plan has merit.
(Reporting by Sinead Cruise and Lawrence White; Additional reporting by Selena Li in Hong Kong; Editing by David Goodman)
