HSBC break-up 'will scare away customers'

HSBC (0005) has been preparing its defense against calls to break-up the lender, saying any such move would be time-consuming and costly, and would scare away even the bank's largest customers, according to the Financial Times.

Top executives of the London-based lender believe a splitting would devalue its shares rather than boost them as it would take years for the bank to get regulatory approvals across all the jurisdictions it operates in, the report said.

The British bank would need to reissue billions of debt and a division would also break up the multinational network which provides services to its big clients operating in different countries such as Unilever, the newspaper said.

A spinoff would harm its operations, including foreign exchange trading and currencies clearing business, according to the FT.

As the bank moves to fight calls for a breakup from its biggest shareholder Ping An Insurance (2318), HSBC has brought on boutique advisory firm Robey Warshaw and investment bank Goldman Sachs as defense advisers, Bloomberg reported.

The preparations come after news broke late last month that Ping An was pushing the lender to carve out its Asian operations as part of a plan to boost returns. HSBC executives are against the idea and have started working with bankers to analyze the case for a spinoff.