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HSBC mulls listing UK banking business amid HQ speculation
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HSBC Holdings Plc is considering floating up to 30 percent of its British retail and commercial banking arm to help meet United Kingdom regulation and unlock value for shareholders, the Financial Times reported yesterday.
British banks now have to ring-fence their retail banking units from riskier investment banking under new rules designed to give more protection to depositors and taxpayers should any more bailouts be needed. A listing would be a logical move to meet that requirement.
The newspaper, citing three people familiar with the case, said the plan was at an early stage but the matter had been discussed with investors and informally at board level.
HSBC is Europe’s biggest bank with a market value of US$200 billion and its UK arm is estimated to be worth 20 billion pounds (US$32.7 billion). It declined comment.
“Such a move would crystallize a higher rating for the whole group, especially in the light of buoyant investor sentiment on the UK economy,” said Shailesh Raikundlia, analyst at Espirito Santo.
If HSBC listed its UK arm it would partially reverse its takeover of UK bank Midland more than 20 years ago, which resulted in it moving its stock market listing to London from Hong Kong.
There is much speculation the bank could move its headquarters back to Asia, and spinning off its retail business into a separate UK listing may make that prospect more likely, analysts said.
HSBC is structured as a collection of country-based subsidiaries, and the holding company wholly owns its businesses around the world. The main exception is its 62 percent holding in Hong Kong bank Hang Seng.
The bank has been cleaning up its structure and selling minority holdings such as its stake in Chinese insurer Ping An as part of a far reaching revamp by Chief Executive Stuart Gulliver since he took the helm at the start of 2011.
Gulliver has stressed in recent results that China’s Hong Kong and Britain are its twin “home markets,” together accounting for more than half of profits so far this year. Profits in Britain have rebounded after several difficult years.
Britain is forcing banks to safeguard their retail and commercial operations after recommendations in the Vickers report, an independent review on the structure of banking, although the changes are not due to come into force until 2019.
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