Abacus | Caught in US-China crossfire, should HSBC split its global businesses?

Holding HSBC shares has been a disaster for investors over the past year. Its share price has nearly halved as the bank was dragged into politics, pushed to take sides in the falling-out between the United States and China, and with its British headquarters told to “toe the line” by joining British banks in not paying investors dividends this year. That last point especially shakes the very core of Hong Kong investors’ investment thesis for the beloved HSBC shares, leaving 0005.HK in a very weak position.

First, a little backstory on the sixth-biggest bank in the world by assets, and the largest one headquartered in London. It was founded on “sound Scottish banking principles” in British Hong Kong in 1865, and incorporated a year later as the Hongkong and Shanghai Banking Corporation. That year, it also opened a branch in Yokohama, and it quickly became the cornerstone of Hong Kong and Asian regional finance. It is one of only a handful of retail banks in the world that are trusted to print physical banknotes for circulation – there are two others in Hong Kong, two in Scotland and four in Northern Ireland.

In 1992, it bought Midland Bank in Britain, a high-profile high-street bank, in a move to become a household name. Midland Bank’s golden griffin logo had gone completely seven years later, with HSBC and its prominent red hexagon in just about every high street in the UK.