HSBC’s biggest shareholder, the Chinese
insurance giant Ping An, is seeking a
stalking horse to force a shareholder vote
on whether to carve up Britain’s biggest
bank into its western and Asian opera-
tions.
Ping An owns about 9 per cent of HSBC
— worth about £9.2 billion — and has been
lobbying the bank’s management to split
into two operations. It wants the Asian
business listed and based in Hong Kong
and the rest listed and based in London.
While Ping An’s stake is large enough
on its own to call a shareholder meeting
and vote on its demands it is understood
to prefer that other shareholders take the
bold step of convening a meeting.
The proposal by one of China’s biggest
companies illustrates the tensions that
HSBC faces in juggling its business
empire which, while based in London,
generated two-thirds of its $19 billion of
profits in Asia last year. HSBC is one of the
biggest companies on London’s stock
market, with a market value of about
£100 billion, and employs 220,000 peo-
ple across 64 countries.
Ping An, in which the Shenzhen state
government owns a 5 per cent stake,
wants to stoke a debate about the future
of HSBC, which moved its headquarters
to London from Hong Kong 30 years ago
when it bought Midland Bank.
The structure of HSBC has been a topic
of controversy for three decades but has
come into focus after tensions between
the West and China mounted following
the imposition of a national security law
in Hong Kong in 2020.
Some City analysts have cautionedJill TreanorBookies offer cash to addiction
charities to avoid crackdown
A body representing Britain’s
biggest betting operators has
proposed stepping up
donations to addiction
charities to fend off a new
statutory levy on revenues.
The Betting & Gaming
Council has tabled an
increase in contributions to
existing addiction and
education charities, in a
move it believes could raise
an extra £100 million a year.
It comes ahead of moves
by the Department for Digital,
Culture, Media and Sport
(DCMS) to publish a white
paper on betting. Legislation
has barely changed since
2005, and ministers are eager
to regulate online gambling.And there is support for
more stringent measures.
Academics have written to
the health and culture
secretaries of “considerable
concern”, saying the current
system creates significant
opportunities for the industry
to influence the agenda.
Under the existing scheme,
operators, including Flutter,
Entain, 888 Holdings and
Bet365, have pledged to
donate £100 million over a
period of four years to the
charity GambleAware.
The Betting & Gaming
Council made a proposal in
February to raise
contributions by at least
£75 million by 2028,
compared with the industry-
wide contribution of£12 million in 2019. All online
gambling operators would
contribute 1 per cent of gross
gambling yield, with land-
based casinos increasing their
input from 0.1 to 4 per cent.
Industry bosses have said a
statutory levy would drain
funds from the charity sector,
as it could require a new
organisation to be established
to distribute the funds.
Conservative MP Julian
Knight, chairman of the
House of Commons DCMS
select committee, said the
“jury was still out” on
whether a statutory levy
would be introduced. “There
is a growing idea that there
should be a levy to help better
fight the consequences of
gambling addiction,” he said.Sabah MeddingsBank of England hit
by staffing shortage
The Bank of England is
struggling to recruit specialist
staff as it falls victim to the
tight labour market.
In a document announcing
it had hired a specialist
recruitment firm, it said “a
number of areas of the Bank,
such as technology, are
currently experiencing acute
staffing shortages for niche/
specialist positions”.
Its in-house recruitment
teams were “unable to deliver
the quantity or quality of
candidates required”, it said.
Employers are raising pay
to attract staff and keep pace
with inflation, which hit 7 per
cent in March. The Bank’s
governor, Andrew Bailey, wascriticised this year for saying
workers should not ask for
big pay rises as they could
make price rises “ingrained”.
The Bank declined to
comment on whether it had
been forced to raise pay for
its advertised roles, but last
week, Bloomberg reported a
vacancy for a chief press
officer at Threadneedle Street
at £113,000, higher than the
current incumbent’s salary.
Unrest over pay has led
staff at the Financial Conduct
Authority to launch a two-day
strike this week.
Separately, the Bank’s
Monetary Policy Committee
is expected to raise interest
rates by a quarter percentage
point next week to 1 per cent,
the highest level since 2009.Oil giants set for bumper payouts
despite threat of a windfall tax
BP and Shell are set to unveil
bumper payouts for
shareholders this week as the
government threatens to levy
a windfall tax if the oil giants
do not reinvest profits into
the North Sea and clean
energy projects.
At BP’s first quarter results
this Tuesday, analysts from
RBC expect the £77 billion
company to announce a
$1.5 billion (£1.2 billion) share
buyback off the back of first-
quarter profits of $5.1 billion.
RBC said political pressure
meant BP would likely wait
until later in the year to ramp
up payouts, forecasting share
buybacks of $4.75 billion over
the following two quarters.In February, BP’s finance
director Murray Auchincloss
told investors it was possible
“we’re getting more cash
than we know what to do
with”.
Business secretary Kwasi
Kwarteng wrote to BP and
Shell last week demanding a
“very clear plan” from them
within weeks to reinvest
profits. “We need to
collectively show ... how the
success of our offshore oil
and gas sector has a direct
and enduring benefit to the
British economy,” Kwarteng
wrote in the letter, seen by
The Sunday Times.
As the government comes
under pressure to mitigate
the impact of soaring energy
bills, chancellor Rishi Sunaksuggested last week that he
would be prepared to u-turn
and slap a windfall tax on oil
and gas companies, unless
they ramp up investment in
new UK energy projects.
Liberal Democrat leader Sir
Ed Davey said: “The
government should put a
windfall tax on oil and gas
companies and that money
should go to people struggling
to make ends meet.”
Analysts from UBS said
Shell’s investors would be
looking for hints at first-
quarter results on Thursday
that it will step up payouts
later this year. They estimate
that Shell will report net
profits of $8.5 billion, against
$3.2 billion in the period last
year.Jon Yeomans Sam ChambersMusic mogul Sir Lucian
Grainge pocketed an
astonishing £230 million last
year in one of the largest-ever
pay packets for a British
executive.
The chairman and chief
executive of Universal Music
Group, whose artists include
Justin Bieber, Taylor Swift
and Billie Eilish, made most
of the eye-watering sum from
bonuses related to its
blockbuster float in
Amsterdam. His pay comes as
record companies and
streaming services have been
accused of failing to
adequately reward
songwriters and artists.
Tom Gray, chairman of the
Ivors Academy, the
independent body for British
songwriters, said the level of
Grainge’s pay was “shocking”
given how little songwriters
received. “It just can’t be
right,” said Gray, a former
guitarist for the band Gomez.
Grainge risks a backlash at
Universal’s annual meeting
this month. Shareholders
have been urged to vote
against the remuneration
report by advisory group
Glass Lewis, which said his
pay was “excessive”. It
added: “We do not believe
the company has provided
justification for the base
salary and bonus levels.”
Universal argued the bulk
of the payments came from
previous owner Vivendi. The
French media giant paid
Grainge €195 million (£164
million) for the float, €20.9
million for securing
investment from Pershing and
a further €17.5 million for
China’s Tencent taking a
stake. The rest is his
€13.2 million salary and a
€24.7 million annual bonus.
Vivendi said Grainge, 62,
was the “visionary behind the
increased value of UMG”.
Gray countered it was the
artists who created the value.Fight: C4’s Alex MahonLast week, culture
secretary Nadine Dorries
started the sale of the
Gogglebox and Bake Off
broadcaster as she launched
the broadcasting white paper.
It is the largest privatisation
since Royal Mail in 2013.
The sale is going ahead
despite 96 per cent of
respondents to consultation
opposing the plans.
The government had
hinted that it hoped to raise atleast £1 billion. Others say it is
worth no more than
£500 million. But a source
said bankers hope for offers
of up to £2 billion — about two
times annual turnover — now
that it will be able to produce
its own in-house content.
Buyers are interested in
Channel 4 because it is a key
national asset with a prime
slot on TV guides. The
broadcaster has invested
heavily in its All4 streamingplatform, which now has a
bigger free library of shows
than BBC iPlayer.
Companies ranging from
media companies to investors
are understood to have
contacted JP Morgan to
express an interest. However,
not all will bid: rivals, for
instance, will be keen to cast
an eye over the books.
Credit Suisse and Robey
Warshaw, the boutique bank,
that counts George Osborneas a partner, are advising ITV
on options. Interest is
expected from Sky, owned by
Comcast, Channel 5 owner
Paramount, cable company
Discovery, and France’s
Vivendi, which owns Canal+.
Critics of the sale argue
that Channel 4’s ad-funded
model means it is no burden
on the taxpayer and that its
remit to source content from
independent production
houses fuels the broaderMinisters hope to raise as
much as £2 billion from
privatising Channel 4 after
receiving more than two
dozen expressions of interest.
Bankers at JP Morgan
advising the government on
the sale of the state-owned
broadcaster have fielded
preliminary inquiries from
interested parties, say
sources close to the process.Jamie NimmoRush for Channel 4 triggers hopes of £2bn price tag
economy. The government is
removing that restriction as
part of the sale. Chief
executive Alex Mahon argues
that any income from the sale
would be dwarfed by the
economic damage caused.
Dorries says Channel 4,
established by Margaret
Thatcher in 1982 to challenge
the BBC and ITV, must be
freed from state ownership to
allow it to raise debt and
compete with streaminggiants such as Netflix and
Amazon. Since the sale was
announced, shares in Netflix
have tumbled as consumers
cut back on subscriptions.
The Channel 4 plans must
go through parliament,
raising the prospect of a
lengthy sale process.
In 2020, Channel 4
generated £934 million in
turnover, with a record
surplus of £69 million, which
is reinvested in the company.that a break-up could be difficult to
achieve. The bank is regulated by the
Bank of England and has issued debt that
requires it to be regulated in London.
A source close to Ping An said it was
gauging the level of interest and support
for an Asian spin-off. If a shareholder vote
was called, it would require the support
of holders of 75 per cent of stock.
The insurer has been an investor in the
bank since 2017 and can trace its roots
back to a state-owned enterprise in
Shenzhen, which was spun out in 1988 by
Ma Mingzhe — known as Peter Ma — who
embarked on a programme of rapid
growth. In a little over ten years, it
became one of China’s largest insurance
companies.
HSBC, run by bank lifer Noel Quinn,
has hoped to close down the discussions
about its structure after a review in 2015
concluded that it should keep its head-
quarters in London.
The board defended its structure at a
rowdy annual shareholder meeting on
Friday in London, where Extinction£9.2bn
Ping An stake in HSBC£100bn
HSBC’s market value Big earners: Lucian Grainge with one of Universal’s top-selling artists Taylor SwiftChinese investor
tries to force vote
on HSBC break-up
Ping An wants emergency shareholder meeting to decide on
splitting banking giant into western and Asian businesses
Rebellion protesters gained access and
disrupted a presentation by chairman
Mark Tucker by breaking into song.
HSBC said it had “regular programme
of engagement with all our investors and
is committed to maximising value for all
our shareholders”.
It said its strategy, which has already
involved the sale of operations in France
and America, was the “fastest way to gen-
erate higher returns and maximise share-
holder value”.
All the resolutions put to a vote —
including the re-election of directors and
pay — garnered support of more than
90 per cent. It is not yet clear how many
investors will swing behind Ping An
although the Financial Times has
reported support from another top
shareholder.
A Ping An spokesperson would not
comment on any details but said: “We
want a debate about the future of the
bank. We want shareholders to partici-
pate in the debate and to propose solu-
tions for HSBC. Ping An supports all
reforms and proposals from investors
that can help HSBC’s operations and
long-term growth.”
Its intervention has come even though
the HSBC’s shares have rallied this year
amid expectations that interest rates will
rise in Britain and America to quell infla-
tion. They ended at 501p on Friday, up
more than 8 per cent this year.
In its first-quarter results last week,
HSBC admitted that it would have to halt
share buybacks because of a knock to its
capital ratios, in part because of the sale
of its French operations.Jim Armitage, page 9BUSINESS
&MONEY
May 1, 2022 · thesundaytimes.co.uk/business thesundaytimes.co.uk/money
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Jamie NimmoMusic’s most powerful mogul tops
the pay hit parade with £230m