Splitting up HSBC ‘could give investors £22bn of windfall’
Shareholders could be in line for a windfall of £22bn if HSBC shuts down Asian businesses, according to research commissioned by an investor
Shareholders could be in line for a £22bn windfall if HSBC shuts down its Asian business, according to research commissioned by an investor.
A report by Hong Kong consultancy In Toto – believed to have been ordered by Ping An, a Chinese insurer agitating for change at HSBC – claims the separation of the Asian branch and selling it could cost up to £21.5 billion.
Windfall: A report by Hong Kong consultancy Into Toto has claimed that the divestiture of the Asian arm could fetch up to £21.5 billion.
Less than a full divestiture, other options might include listing 25 percent of the entire Asian business, or listing 25 percent of the Hong Kong branch.
These moves will raise £6.7bn and £15.6bn of additional capital, respectively, the InToto report said. HSBC is headquartered in London and its primary listing is on the London Stock Exchange. However, it makes the lion’s share of its profits in Asia.
Ping An, which holds a 9 per cent stake in HSBC, believes the bank’s western operations are stifling the valuation and growth prospects of its business in the east.
The plot to break up HSBC has raised eyebrows around the city.
An analyst at a firm, which holds a stake in HSBC through its investment arm, said liquidating the bank could create additional tax liabilities and duplicate jobs, adding: ‘Breaking such a big bank is not technically a problem. It will be very complicated.
Another analyst at a major HSBC shareholder echoed those concerns, warning: ‘There’s no way this will gain any traction – breaking a bank of that size would be too complicated.’
Toto’s report noted these concerns with the caveat that there could be ‘temporary or technical implications for business or market sentiment’ which it did not take into account.
It also warned of possible ‘instability’ after any break-up.
Ping An declined to comment.
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