LONDON, April 18 Reuters HSBC has fundamentally failed to address key business model challenges, its biggest shareholder said on Tuesday, in an escalation of a spat between Europe39;s biggest bank and Chinese insurer Ping An.

HSBC should separate its Asia business into a Hong Konglisted entity, top shareholder Ping An said in an update to proposals it began to push for last November.

The renewed salvo from Ping An comes as shareholder advisory group Glass Lewis urged investors to vote against proposals calling for a strategic review and dividend policy revamp, deepening divisions between factions of the bank39;s ownership ahead of its annual meeting on May 5.

HSBC reiterated its stance that the proposals lack merit.

It is our judgment, supported by thirdparty financial and legal advice, and with thirdparty assurance, that alternative structural options will not deliver increased value for shareholders, an HSBC spokesperson said.

Glass Lewis said the strategic review proposal, filed by individual shareholder Ken Lui in Hong Kong and backed by Ping An, was not in shareholders39; interest.

Lui39;s resolutions demand that HSBC restores dividends to 51 cents per share and provide regular updates on strategy, including the possibility of spinning off its Asia business.

HSBC also denied a claim by Ping An that the bank had refused to verbally engage in discussions on the proposals.

The lender has had extensive discussions with Ping An on these topics, a spokesperson…