Top HSBC shareholder exploring ways to cut $13 billion stake
Top HSBC shareholder exploring ways to cut $13 billion stake | Insurance Business Asia
Insurance News
Top HSBC shareholder exploring ways to cut $13 billion stake
How is the relationship between the two?
Insurance News
By
Jonalyn Cueto
Ping An Insurance Group Co., the largest shareholder in HSBC Holdings Plc, is considering various strategies to reduce its 8% stake in the European banking giant, according to sources familiar with the matter.
An internal team at Ping An is exploring further share sales, following a $50 million sale disclosed last week. This move could help reduce its $13.3 billion position in HSBC, Bloomberg’s sources said. Another potential option being considered is a sale to a sovereign wealth fund or an ultra-wealthy investor in the Middle East. However, it is unclear whether formal talks regarding a larger sale have begun, though members of Ping An’s board are currently visiting the Gulf, the sources added.
According to Bloomberg, Ping An’s interest in reducing its stake reflects its intention to lock in profits from its investment and acknowledges that its efforts to push for major reforms at HSBC have been largely unsuccessful. Ping An Asset Management, the firm’s investment unit, reiterated on Friday that HSBC remains a long-term financial investment, citing the bank’s competitive advantage in Asia.
HSBC declined to comment on the matter.
Over the past year, HSBC shares have risen by about 15% in London, reaching their highest level since 2018 earlier this month. However, shares fell by 0.7% on Thursday and further declined by 3% in Hong Kong on Friday, while Ping An’s shares gained 1.3%.
Citigroup analysts Andrew Coombs, Michael Zhang, and Rajkumar Choudhary noted that any decision by Ping An to reduce its stake would likely occur over a prolonged period to maximize value and mitigate the impact of overhang risk.
Significant changes for the bank
Ping An has had a contentious relationship with HSBC in recent years, advocating for significant reforms, including spinning off its Asian arm. These efforts were defeated at a shareholder meeting last year. Earlier this month, Ping An lodged a protest vote against HSBC’s chief executive officer Noel Quinn at the company’s annual shareholder meeting, just days after Quinn announced his retirement.
HSBC is currently considering internal candidates for its next CEO, including chief financial officer Georges Elhedery and Nuno Matos, head of wealth and personal banking.
During Ping An’s ownership of the HSBC stake, the bank has had to navigate deteriorating relations between China and the US. Asset managers like Temasek are increasingly seeking to sidestep such geopolitical tensions by focusing on investments in companies with large, domestic-focused businesses.
This month, Ping An’s asset management arm sold $50 million of HSBC shares, reducing its stake from 8.01% to 7.98%. This was the first disclosed sale since Ping An began its campaign against HSBC. Ping An became a major shareholder in HSBC in 2017 and has since seen the bank’s stock rise significantly, partly due to CEO Noel Quinn’s efforts to shed non-core assets and boost returns.
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