Top China expert accuses HSBC bosses of being in ‘public denial’ of Beijing’s determination to carve up the bank’s Asian operations
Divide: HSBC expands east and west
HSBC bosses are preparing to mount a vigorous defense this week against calls by major shareholder Ping An for the bank to be broken up.
But a top China expert this weekend accused bank bosses of being in “public denial” of Beijing’s determination to spin off HSBC’s Asian operations.
The lender’s executives are said to believe that a separation would be costly and disrupt its international business activities. They are expected to hold the line on any further breakout pushes this week when the banking giant releases its second-quarter results.
It comes after Ping An, the state-backed Chinese insurer that has built an 8% stake in recent years, launched a campaign in April to force the split. Then, last week, it emerged that HSBC had become the first foreign company operating in the country to officially establish a Chinese Communist Party (CCP) committee within its ranks.
HSBC’s board and several city figures claimed the company was stronger as a single entity because much of its revenue came from connecting businesses in the East and the South. ‘West.
But Michael Sheridan, communist state expert and author of The Gate To China, said a split of British society into separate Western and Asian businesses was now all but inevitable. He described HSBC as “the diamond bank of Hong Kong” and said officials in Beijing were desperate to get their hands on it. There are growing concerns about interference from Beijing.
Carmaker Stellantis this month scrapped its Jeep operation in the country and boss Carlos Tavares complained that political interference was increasing “day by day”.
City councilors told the Mail on Sunday that separating HSBC’s UK operations, with its Birmingham headquarters, regulated capital structure and management team, would be relatively straightforward. This would allow the rest of the group to “pivot” to Asia, they said.
A source said the question had been raised of ‘what to do’ with the UK business after the company sold its US retail banking network last year and the focus shifted to Asia. Another source said separation from the UK banking arm was not being considered.
Sheridan said: “There are good financial and business reasons to advocate a breakup. But the reason for [Ping An’s demand] is not financial or commercial – it is political.
“Ping An’s board did not wake up one morning to a sudden crisis of shareholder activism. HSBC’s senior management is in public denial. They try to reason financially and commercially against an argument that is not based on commercial grounds.
The bank is based in Britain, with a significant presence in the high streets of the UK. But it makes most of its money in Asia, leaving leaders walking a tightrope that means cooperating with the CCP.
This position has become increasingly unpleasant for British politicians after China imposed a draconian “national security” law on Hong Kong in 2020. Sheridan concludes that rising tensions since mean that HSBC and its boss , Noel Quinn, will ultimately have no choice but to split the bank.
HSBC has denied that the creation of a CCP committee at its investment bank – required by Chinese law if requested by employees – was prompted by anything other than a staff petition. But Sheridan said: ‘This is a high profile, state-controlled movement. This is the result of a political decree at the highest level in China. They want to split HSBC into a Western business and an Asian business.