HSBC shares rise on dividend optimism after Canada sale

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(Bloomberg) – Shares of HSBC Holdings Plc rose after the lender agreed to sell its Canadian unit for C$13.5 billion ($10 billion) in cash and said it was « proactively » considering a single dividend or a new share buyback.

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Shares gained 2.2% in Hong Kong, the biggest gain since Nov. 15.

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Paying dividends from the London-headquartered lender is an important target for the Hong Kong retail base, which has historically owned much of the bank. The lender caused an uproar in the city in 2020 when it halted dividend payments at the request of UK regulators.

HSBC is under pressure from Ping An Insurance Group Co. of China, its largest shareholder, which has complained about the company’s strategy and its poor returns compared to other banks. Ping An pushed HSBC to consider splitting off its Asian operations, a move the bank rejected. An external spokeswoman for Ping An declined to comment on Wednesday.

News of the sale was welcomed by Christine Fong Kwok-shan, councilor for Hong Kong’s Sai Kung district, who has previously led local investors to try to file suits against the lender for failing to pay dividends.

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« We certainly welcome that they are considering having a special dividend, » Fong said. « We have to remind HSBC that they have to count the last time they revoked the dividend issue, they have to add it up and reissue the dividend to us again. »

Fong represents about 500 minority shareholders who support a spin-off of HSBC’s Asian operations. She viewed the sale as a « first step » and said there was no change in pressure from minority shareholders for HSBC to reorganize its business and refocus on Asia.

HSBC said any distributions related to the deal are expected to take place from early 2024, after the deal closes.

Activist shareholder Ken Lui, the organizer of a group pushing for a spin-off of the lender’s Asia business, said in a statement that HBSC should share a clear timetable for restoring the quarterly dividend and increasing the payout ratio to shareholders. pre-Covid levels.

The lender paid 25 cents in dividends in 2021, about half the level in 2018.

(Add activist shareholder comment to ninth paragraph)