Implications of an HSBC break up would be vast and would cost billions of dollars
For years, HSBC Holdings and Ping An Insurance Group enjoyed a cosy relationship, from the turns they took financially backing each other to the easy rapport between their influential chairmen.
“Ping An understands the way regulatory winds are blowing,” said Isaac Stone Fish, founder of Strategy Risks, which specialises in corporate relationships with China. “Companies increasingly have to choose sides between the US and China, and we might see more corporations considering breaking up as a way to choose between the two powers.”The implications could be vast.
But while Ping An’s proposal might prove to be a pipe dream, the relationship between the two firms has shifted.Before now, Ping An’s thoughts have rarely spilled beyond the boardroom. The now-public nature of this debate — which first emerged in a Bloomberg News report — suggests it is exasperated. One former senior HSBC executive, who asked not to be identified discussing the situation, describes it as one of the most significant events in the lender’s recent history.
So too the role reversal. HSBC bought its initial 10% stake in Ping An in 2002 as part of a deal that included providing personal finance and insurance expertise to the Chinese firm. A couple of years after that, founder Ma praised HSBC’s “respect for the independence of Ping An’s management style, approach and corporate culture.
“We’re not closed off to hearing alternative views, but we do think that executing the strategy will deliver a lot of shareholder value over the next 12 to 18 months,” he said.
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