A break-up of HSBC PLC is not the way to generate more value for investors, according to analysts at rival Credit Suisse.
Reports at the weekend said that insurance group and 8.2% HSBC shareholder Ping An wants the bank to look at a demerger of its Asian businesses.
Credit Suisse’s bank team though suggests HSBC’s current strategy of gradually edging towards the East and its growing middle classes remains the way to go.
HSBC jumps on break-up proposals from largest shareholder
Moreover, Credit Suisse is sceptical that HSBC’s Asian arm would attract the same kind of premium as the group’s Hang Seng bank.
Limiting the operation just to Hong Kong might attract a rating of 13x earnings, but this would "limit the combined re-rating opportunity".
Shorn of Hong Kong, the rest of the group trades “at an un-striking seven times 2023 earnings or in line with European banks and Citigroup.
“While there has been a lot of focus on Wealth with good progress, GBM is a third of RWAs and isn’t covering cost of equity
“It is hard to get away from the conclusion that GBM (global banking and markets) and non-home markets are the key profitability drags for the group.”
'Hold' is Credit Suisse’s view of HSBC shares with a 525p price target.