HSBC sees “no big deals”

REUTERS

HSBC said it had no appetite to take advantage of turmoil in the euro zone and make big acquisitions there or anywhere else where rivals are selling major assets.

“We're good at running our own businesses, we're not so good at making acquisitions, so history suggests that we would do better to run our own firm and focus on that,” said Stuart Gulliver, chief executive of Europe's biggest bank.

Gulliver was speaking after the bank's AGM, where the bank sidestepped an investor backlash on pay on the scale seen by some rivals.

It said 10.2 percent of shareholders voted against its pay plan, above the average for a FTSE 100 firm but down from 18.7 percent last year. Including abstentions, 13.7 percent failed to back this year's vote.

“It's not a vote without significance,” Catherine Howarth, a private HSBC shareholder, told Reuters. “It's still sizeable. In historical terms these are high levels of dissent.”

Howarth, who is chief executive of Fair Pensions, said she wants HSBC to discuss its pay plan with private shareholders, and not just big institutions.

“The remuneration committee seems to have done more to advance the financial interest of the board rather than shareholders,” she said.

John Thornton, an HSBC director and head of the remuneration committee, defended the bank's strategy on pay, which was changed last year. “We believe we have now got a system where the interests of the senior people is now tied very closely to the shareholders,” he said.

A growing number of investors are voting down executive pay plans or showing their anger in what has been dubbed the “shareholder spring”, reflecting public anger at rises when thousands are losing jobs.

Shareholder rebellions in the UK have ranged from media firm Trinity Mirror to oil explorer Cairn Energy, and Barclays saw more than a quarter of its shareholders revolt.

NO BIG DEALS

Gulliver last week gave an update on the first year of a three-year revival plan to cut costs and boost profitability, which will see it focus more on fast-growing Asian markets.

He expects to deliver extra annual revenue of $2 billion under the plan, which he said could add more than $10 billion to its market value. “There are very few M&A deals that will drive that sort of appreciation,” he said.

Under the plan Gulliver is assessing all businesses against five core measures - dubbed “five filters” - and plans to apply that strictly to potential deals.

“There would be very few things that get through the five filters ... I would be categorical about no big deals globally. I'd only qualify it with unless there was a large deal that fit the five filters, but that's very unlikely,” he said.

HSBC has emerged from the financial crisis stronger than most rivals, and has in recent years considered buying Nedbank in South Africa and Denizbank in Turkey, and been linked with other assets.

Gulliver specifically told investors he saw no big deals in Africa, where HSBC has said it wants to grow, and the euro zone, where businesses are available.

Smaller, bolt-on deals, such as recent ones in Oman, the United Arab Emirates and India, could continue, he said. - Reuters