Global banking group HSBC is under mounting pressure as Ping An argued that an independent Asia business listed in Hong Kong would have higher profitability, lower capital requirements and more autonomy to make decisions.
Ping An wants HSBC to undertake an overhaul that would result in the market giving the bank more credit for its large Asian business, and make those operations less beholden to regulators in London.
In a briefing note on 3 May, Susannah Streeter, senior investment and markets analyst Hargreaves Lansdown said: "HSBC shareholders are pretty sanguine today about the calls for the bank to be split up and its Asia business hived into a separate entity with shares rising.
"The Bank's stated determination to continue its pivot to Asia while also spanning the world, appears to have reassured shareholders that there won't be an immediate change of course following demands from the bank's largest shareholder, the Chinese insurance giant Ping An.
"If anything the demand for a more intense focus on Asia under a separate entity, is a vote of confidence in the steps management have already taken to boost growth by selling its French retail operation, and the US mass market business and ploughing the capital being released into historically stronger performing regions in Asia."
She added: "But there is a risk surging covid cases in China could take their toll with the bank already having experienced reduced equity market activity, wealth management slowdowns and closed branches after outbreaks in Hong Kong. China's beleaguered real estate sector is also a continuing headwind for the bank, which a separate Asia focused entity would be particularly susceptible to."
