The British-based bank defeated two special resolutions calling for its breakup at its annual general meeting on Friday. But will that change anything? finews.asia takes a look. 

In recent years, HSBC’s annual general meeting has become a general free-for-all for anyone who has some kind of grudge to bear against the institution. This time, it was climate activists and former Midland bankers protesting about pension clawback.

But there was something else. As finews.asia previously reported, its largest shareholder, Ping An, also had a thing or two to say. After becoming increasingly vocal and public about its spin-off demands, it drew a line in the sand and called for a vote. 

Resounding Defeat?

Ping An lost. According to HSBC, more than 80 percent of shareholders backed the board and management’s recommendation to reject the resolutions of Ping An and another shareholder, Lui Yu Kin, aiming to split off the Asian business and fix annual dividend payments.

But it might not be the resounding defeat many pundits, and management, are making it out to be. With total shareholder turnout at 50 percent, Ping An’s votes comprised 18-19 percent of the total against.

In practice, they now have a choice. They can work quietly in the background to buy a larger stake in HSBC - or attempt to get another shareholder on board.

A Few More Votes

The bank indicated the turnout they had this year as normal, which means that just getting another 10 percent on their side will do a great deal.

It clearly would blow a hole in chairman Mark Tucker’s rationale this year that «the large majority of HSBC’s shareholders have voted overwhelmingly to support the bank’s strategy».

That might be, but «large majority» and «voted overwhelmingly» seems a slightly odd formulation when your largest shareholder and a significant proportion of the retail shareholder base in your original head office and city seem dead set against you.

No Love Lost

The AGM ostensibly raises another point. There seems to be no love lost between Ping An and HSBC’s board and management. 

Everyone nominated for election or re-election to the board got substantially more votes in support and far fewer votes against than the chairman and chief executive Noel Quinn. 

In that, it would be reasonable to infer that Ping An and Kin were largely responsible.

East-West Divide

That also appears to trace the outlines of a clear east-west divide.

Everyone in Asia was seemingly in support of the two motions while investors in the West, such as the Norwegian sovereign wealth fund, HSBC’s third-largest shareholder, took the bank’s side.

Although that is hard to conclusively prove, it is a difficult position for the institution to be in if it were true.

Saved by Performance

HSBC believes they can now draw a line under the debate about the bank’s structure. As part of that, they took great comfort in their first quarter performance. 

As finews.asia has reported, the bank more than tripled its quarterly net profit. There was a great deal of talk about international connectivity, albeit without a Canada, a much-reduced US business, and a French business in limbo.

But, still, the issues it always faced haven’t changed, something that finews.asia has extensively discussed.

Playing Both Sides

Almost half of its pre-tax profit (45 percent) comes from its Hong Kong-based entity (more specific regional numbers are not disclosed in quarterly updates). 

That was the case even in a three-month period that was marked by significant one-offs, such as the acquisition of the UK business of Silicon Valley Bank. With that kind of dependency on one city and Asia as a whole, HSBC still gives the impression that they are trying to have it both ways.

But Ping An can also do that - while playing the long game at the same time. They just need to book a few business trips to Norway and start pleading their case.