4th Nov 2022 17:44
(Alliance News) - HSBC Holdings PLC shareholder Ping An Insurance on Friday said it would support a spin-off plan and added that the Asia-focused financial services firm needs to urgently trim costs.
HSBC has also previously come under pressure from its largest shareholder, Ping An Insurance, to spin off its Asia operations despite pushback from executives.
Ping An on Friday, however, said it has never publicly called for a spin-off.
"We would like to take this opportunity to clarify that Ping An has never made any public comments on HSBC's performance, spin-off or other topics. We have repeatedly reiterated that, as one of HSBC's major shareholders, we are willing to study and support any proposals that are conducive to improving HSBC's operating performance and enhancing the company's value, and that are helpful to HSBC's development strategies and business strategies," HSBC said.
Ping An said that despite its disagreements with HSBC's executives, the duo have "maintained open, friendly and constructive communication at all levels".
"However, in recent years, as you have observed, the market has been rather disappointed with HSBC's poor performance, dividends, market capitalization, etc," Ping An said.
"We will support any initiatives including a spin-off that are conducive to improve HSBC's performance and value; we will consider any suggestions that will help HSBC improve its development and operation strategy. Meanwhile, we would also suggest HSBC adopt an open attitude by studying the relevant suggestions carefully and prudently and incorporating constructive views into its prioritized agenda, rather than attempting to simply bypass and reject them."
Ping An said that while HSBC's expense-cutting plans are paying off, the company's cost-to-income ratio is still far too high at 64.2%, higher than peer average.
Ping An added: "Meanwhile, HSBC Asia's cost-income ratio is 58.7%, which is 18% points higher than the 40% mean of an equivalent Asia banking peer group. We suggest HSBC be much more aggressive in radically reducing its costs to close the huge 'cost-income ratio gap', for example, by reducing its operating costs such as manpower and IT, as well as reducing its 'global headquarters costs as a % revenue' compared to that of an equivalent peer group. This is the most important, urgent and absolutely needed action for HSBC to improve its business performance, reducing costs and increasing efficiency, particularly amid slowing growth in the global financial industry."
HSBC shares closed 1.6% higher at 470.48 pence each in London on Friday.
By Eric Cunha; [email protected]
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