HSBC played down a report yesterday it was considering listing a third of its British retail and commercial banking arm in order to meet UK regulation and unlock value for shareholders.
The Financial Times yesterday said HSBC was considering selling 30 per cent of its UK arm. It said the plan was at an early stage but the matter had been discussed with investors and informally at board level, citing three people familiar with the project.
HSBC declined to officially comment, but Antonio Simoes, the head of its UK bank, said in a message to staff: "We understand this could be unsettling for employees and want to confirm that this is speculation and nothing more."
The note reiterated that Hong Kong and Britain were HSBC's twin "home markets" and together typically account for 40-50 per cent of annual profits. It said given recent "encouraging growth forecasts" for Britain "it would be unusual to consider a flotation of 30 per cent of the business" when the bank would benefit more with its 100 per cent ownership.
British banks will have to ring-fence their retail banking units from riskier investment banking under rules designed to come into force in 2019 to give more protection to depositors and taxpayers should any more bailouts be needed. A listing could be a logical move to meet that requirement, some analysts and bankers said.
Shares in the bank were down 0.2 per cent 657.8 pence, underperforming a slightly firmer Europe banking index.
HSBC is Europe’s biggest bank with a market value of $200 billion and its UK arm is estimated to be worth about 20 billion pounds ($32.7 billion).
Analysts said spinning off the UK business could crystalise a higher valuation for the group, but it was unclear how big the regulatory or strategic benefits would be.There is speculation the bank could move its headquarters back to Asia, and spinning off a separate UK listing may make that prospect more likely. – (Reuters)
