HSBC shareholders grill executives at chaotic Hong Kong event

HONG KONG (BLOOMBERG) – HSBC Holdings’ first meeting in three years with its investor base in Hong Kong became chaotic as disgruntled shareholders were denied access to the overfilled event on the city’s Kowloon side.

Dozens of shareholders, including elderly in wheelchairs and carrying walking sticks, were refused access to the main hall at Kowloon Bay International Trade & Exhibition Centre on Tuesday (Aug 2).

Organisers cited Covid-19 restrictions for the miscues, which left many of the attendees visibly frustrated at their first chance to grill HSBC executives since 2019.

Chief executive Noel Quinn and chairman Mark Tucker fielded questions for about an hour from hundreds of shareholders that were able to gain access. They apologised for cutting dividends and were forced to defend their dismissal of a plan by its largest shareholder Ping An Insurance Group to split off the Asian operations.

HSBC on Monday delivered better-than-estimated profits for its second quarter and pledged to return to paying quarterly dividends next year and eventually restore payouts to pre-Covid-19 levels.

Mr Tucker told the crowd that the bank has a “strong intent” to bring payouts back to past levels.

“We hope this strategy served as a thank you to you all,” Mr Peter Wong, the chairman of HSBC’s Hong Kong business, also said at the meeting.

Known colloquially in the city as The Hong Kong Bank, local shareholders make up about a third of the bank’s investor base. A broad part of the city – from retirees to taxi drivers – have held onto the stock for years. But that loyalty has been tested, with dividends at half of what they were in 2018.

Among those flocking to meeting were the Cheng family, which first bought HSBC shares about 40 years ago. The family has a tradition of attending the annual meetings, but the elderly Chengs were this time unable to gain access to the main hall due to the virus restrictions.

Mr Cheng said he has relied heavily on HSBC dividends from his about 20,000 shares and is still smarting from the move to scrap dividends in 2020.

“I hope this won’t happen ever again,” he said outside the meeting room. “It’s hurting the hearts of old shareholders and literally lives.”

The plan by Ping An to split HSBC has gained traction among some of the bank’s retail investor base, with one activist shareholder forming a new group to call for the spin-off of HSBC’s Asian operations. Shareholders also picketed outside the meeting, calling on the bank to spin off of its Asian business.

Support

“We note the demands expressed by a number of HSBC’s small and medium-sized shareholders,” a Ping An spokesman said in a message. “We support any proposal that is conducive to improving HSBC’s operating performance and enhances shareholder value.”

Mr Quinn said at the meeting that a spin-off would have a material negative impact on the bank. At least one attendee also offered support for HSBC’s desire to stay intact.

The former British colony is the beating heart of the bank’s global operations, accounting for about 30 per cent of the group’s 2021 adjusted profits. But decisions such as the halting of dividends have been driven by regulators in Britain, chafing the local base.

Still, they are a fragmented group that have struggled to wield clout in the past.

An attempt to call for an extraordinary general meeting in 2020 to reverse the bank’s decision on dividends failed to reach the 5 per cent required threshold.