Editorial | HSBC buys time but knows shareholders expect much more
- For now, bank bosses in London seem to have earned some goodwill by paying a dividend and resisting calls to break up the lender
Hong Kong’s tough quarantine rules may have been bad for international business, but at least they helped HSBC honchos show their determination to meet local minority shareholders and win them over with a new charm offensive.
Voluntarily undergoing quarantine without exemptions ought to have earned them a few merit points in the eyes of sceptical shareholders at their latest informal meeting. But in the end, money talks. For legions of local long-time investors, it was about not having dividend payouts suspended again. For senior management, it was about resisting pressure from some share owners, such as Ping An Insurance Group with a 9.2 per cent stake, to break up the banking giant.
The two issues are closely linked. For now, the bank bosses seem to have earned some goodwill. Based in their London headquarters, they quarantined themselves in hotels for seven days before meeting shareholders. Their appearance underscored the importance they place to assuaging the bank’s legion of minority investors, many of whom depend on the bank’s dividends for regular income.
Having a surprise 61 per cent jump in net profit in the last quarter helped bolster the bankers’ case, though the quality of the profits might leave something to be desired. A big chunk was from a US$1.8 billion tax offset from Britain while the bank’s most important profit centre, Hong Kong, saw pre-tax profit fall by 16 per cent.
Even so, the headline numbers looked impressive; the bosses duly used them to argue against splitting up their bank with it having global and diversified operations to deliver value to investors.