Shares in HSBC Holdings gained on Tuesday after its largest shareholder, Chinese insurance giant Ping An, urged a break-up of the London-headquartered bank in a bid to improve returns.
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Sources familiar with the situation said on Friday that Ping An had called on HSBC to look at options including spinning off the Asian business, where it earns two-thirds of its pre-tax profits, or taking other steps to boost its valuation.
HSBC shares added 1.85 per cent in Hong Kong trade, helping lift the broader market, which edged up 0.1 per cent to pare earlier market declines. The Hong Kong and London bourses were closed on Monday for a holiday.
"That Asia makes up the majority of HSBC's revenues suggests that a spin-off may be logical, but it needs to be balanced by the fact that a significant portion of that is the result of HSBC's global footprint bridging East and West," said Justin Tang, head of Asian research at investment advisory firm United First Partners.
HSBC, Europe's largest bank, has not commented on Ping An's involvement but defended its overall strategy in a statement, saying that it believed it had the right strategy and was focused on executing it.
Chief Executive Noel Quinn, who has run the bank for the past two years, is ploughing billions into Asia to drive growth, with a focus on wealth management, and has also moved global executives there.