A Chinese national flag flies in front of HSBC headquarters in Hong Kong, China, July 28, 2020.
A Chinese national flag flies in front of HSBC headquarters in Hong Kong, China, July 28, 2020. Reuters / Tyrone Siu

Bosses of HSBC will meet retail investors on Tuesday in Hong Kong, the biggest market for Europe's largest lender, as they seek to convince shareholders that their strategy to operate as a global bank is vital to boosting growth.

The London-headquartered group is under pressure from its largest shareholder, Ping An Insurance Group Co of China Ltd, to explore options including spinning off its mainstay Asia business to increase shareholder returns.

The informal meeting, held to discuss earnings and strategy, comes a day after HSBC rejected the break-up call, reported forecast-beating profit and promised chunkier dividends, sending its Hong Kong-listed shares to a one-month high.

Ping An, which has been building a stake in HSBC since 2017, when the bank's share price was about a third higher, has publicly said it supports all reform proposals that could help increase the long-term value of HSBC Holdings PLC.

The insurer owned 8.23% of HSBC as of early February.

Local investors are also calling for a change in strategy.

"Retail shareholders would welcome any proposals that change the status quo, or boost confidence of investors in management," said shareholder Ken Lui, founder of a HSBC shareholder group.

"But why am I being vocal and support the spin-off proposal? Because I don't have confidence in management," he said.

During the COVID-19 pandemic in 2020, the shareholder group urged HSBC to restore its dividend payment after cancelling it following a request to lenders by the Bank of England.

HSBC's Monday comments represented its most direct defence since news of Ping An's proposals broke in April.

Chinese state entity Shenzhen Investment Holdings Co is the insurer's second-biggest shareholder and another state entity, Central Huijin Investment, is among its top five shareholders, company filings showed.

A Hong Kong politician has also urged HSBC to appoint Ping An's representatives to its board.

In 2016, HSBC decided to keep its headquarters in London, rejecting the option of shifting it back to its main profit-generating hub of Hong Kong after a 10-month review.