HSBC rejects pressure to sell off Asian unit

HSBC said a break-up would entail big execution costs

HSBC has rejected pressure from its largest shareholder, Ping An Insurance Group Co of China, to explore strategic options such as spinning off its Asian business to unlock greater shareholder value.

Some retail investors in Hong Kong have supported the proposal but the bank focused on plans to accelerate the restructuring of its US and European businesses, and reliance on its global network to continue to drive profits.

It said a demerger or spinoff of its Asian business risks huge one-off execution costs, higher taxes and ongoing running costs for the bank.

The bank posted a better than expected 15% dip in first-half profit, as fees from dealmaking more than halved during the period and it ramped up provisions for credit losses.

But Europe’s biggest bank lifted its returns guidance in the belief that rising interest rates will boost revenue.

The bank reported a pretax profit of $9.2 billion for the six months ending 30 June, down from $10.84bn a year ago but beating the $8.15bn average estimate of analysts compiled by the bank.

Asia’s share of profit rose to 69% in the first half from 64% a year ago.

It declared an interim dividend of 9 cents per share and intends to revert to quarterly payouts from the beginning of 2023. It also said share buybacks remain unlikely this year.

Shares listed in Hong Kong reversed early losses and rose more than 2.5% in afternoon trade on Monday.

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