By Selena Li and Anshuman Daga

HONG KONG/SINGAPORE (Reuters) -HSBC executives on Tuesday defended the lender’s strategy to operate as a global bank and promised better returns to disgruntled individual shareholders in Hong Kong, a day after rebuffing a break-up plan by its top investor.

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

Investors grilled HSBC Chairman Mark Tucker and CEO Noel Quinn for more than an hour on the bank’s strategy for dividends and growth in the meeting attended by hundreds of shareholders in the business district.

“Resuming paying quarterly dividend in 2023 is ‘too late’ and the promised level of dividend is ‘too low’, said Jay Chong, an activist shareholder, who is in his 30s and whose family holds more than half a million shares of HSBC.

Hong Kong is HSBC’s biggest market and a key investor base for the Asia-focused bank. Some investors in the city have been vocal in their support of Ping An’s plan.

About 30 HSBC retail investors staged a brief protest near the conference room entrance at Tuesday’s meeting just before it began, chanting “management should step down” over dividend cancellations and sluggish returns.

HSBC met the shareholders a day after rejecting the break-up call as it reported forecast-beating profits, raised a profitability goal and promised chunkier dividends.

The bank has argued that a spinoff would be costly, time consuming and require billions in technology spending, while also raising regulatory risks.

“Our strategy which is now two and half years into execution should put the bank on the path to deliver returns in 2023 at a level we have not achieved in the last 10 years,” Tucker said on Tuesday. “This return should help drive and increase the share price and have a positive impact on the dividend.”

‘DEAD IN THE WATER’

Analysts said retail shareholders are unlikely to have the heft to eventually force a vote on a break-up. Big institutional investors contacted by Reuters declined to comment on the issue.

“I regard the ‘break-up’ talk as dead in the water,” said Ian Gordon, a London-based banking analyst at Investec, citing the lack of enthusiasm among UK institutional investors for a costly restructuring.

“I think the most likely outcome is that HSBC will continue to walk the tightrope [between China and the West] while keeping the group largely intact,” Gordon added.

Retail shareholders at the Hong Kong event clapped when HSBC’s management was asked to consider paying special dividends and relocating to Hong Kong.

Ping An, which has been building a stake in HSBC since 2017, when the bank’s share price was about a third higher, has not called publicly for a break-up. The insurer owned 8.23% of HSBC as of early February.

“We note the demands expressed by a number of HSBC’s small and medium-sized shareholders,” a Ping An spokesperson said. “We support any proposal that is conducive to improving HSBC’s operating performance and enhances shareholder value.”

Hong Kong retail shareholders were particularly unhappy when HSBC scrapped its dividend in 2020 during the COVID-19 pandemic, following a request to lenders by the Bank of England.

“Retail shareholders would welcome any proposals that change the status quo, or boost confidence of investors in management,” said shareholder Ken Lui, founder of an 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.

HSBC shares were down 1.2% in London on Tuesday, against a flat benchmark FTSE 100 index and after a 7% rally the day before following the bank’s better-than expected results.

(Reporting by Selena Li and Anshuman Daga; Additional reporting by Lawrence White and Iain Withers in London; Editing by Muralikumar Anantharaman and David Holmes)

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