Global banking giant HSBC is facing increasing shareholder pressure to overhaul its global operations, intensifying uncertainty over its strategic direction, says Fitch Ratings.
At its upcoming annual meeting, investors in HSBC will consider a shareholder resolution that calls for a strategic review of the bank, including a demand for greater independence for its operations in Asia.
The potential implications of such a review remain unclear, the rating agency said, “but a separation of the group’s Asia operations would be costly, with the division of functions likely to be time consuming given high integration across the businesses and legal entities.”
Fitch noted that the bank’s operations in Asia are core to its international franchise “and have been growing in importance for the group in recent years.”
For instance, in 2022, the region contributed to 56% of HSBC’s reported operating income and profits, it said.
Recently, the bank has stepped up its focus on Asia, with moves such as selling its Canadian subsidiary and planning to sell its French retail bank, along with its Greek and Russian operations, Fitch noted.
While it’s too early to assess the credit rating impact of a strategic review, increased shareholder pressure to revisit the bank’s structure “increases uncertainty surrounding the execution of the group’s strategy,” it said.