HSBC Shares Rise on Dividend Optimism After Canada Sale

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(Bloomberg) — HSBC Holdings Plc shares rose after the lender agreed to sell its Canadian unit for C$13.5 billion ($10 billion) in cash and said it’s “proactively” considering a one-time dividend or fresh stock buyback. 

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

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The London-headquartered lender’s dividend payout is an important focus for Hong Kong’s retail base, which historically has owned a large chunk 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 poor returns compared to other banks. Ping An has pushed HSBC to consider a spinoff of its Asian operations, a move the bank has rejected. An external spokeswoman for Ping An declined to comment on Wednesday. 

The news of sale was welcomed by Christine Fong Kwok-shan, a councilor for Hong Kong’s Sai Kung district, who has previously led local investors in trying to make claims against the lender for not paying dividends. 

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“Certainly we welcome they may consider to have a special dividend,” said Fong. “We have to remind HSBC that they should count the last time they revoked the dividend issue, they should add it up and reissue the dividend to us again.”

Fong represents about 500 minority shareholders that support a spinoff of HSBC’s Asian business. She considered the sale a “first step” and said there’s no change in the minority shareholders’ push for HSBC to reorganize its business and refocus on Asia.

HSBC said any distributions related to the deal is likely to be from early 2024 onwards, following completion of the transaction. 

Activist shareholder Ken Lui, the convener of a group pushing for a spinoff of the lender’s Asia business, said in a statement that HBSC should share a clear timeline for restoring the quarterly dividend and raising the payout ratio to pre-Covid levels. 

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

(Adds comment from activist shareholder in ninth paragraph)