Hang Seng Bank shares jumped 29.5% Thursday after parent HSBC announced plans to take it private, valuing the lender at more than 290 billion Hong Kong dollars (over $37 billion).
HSBC, Europe’s largest lender, has asked Hang Seng Bank’s board to put forward a privatization proposal to shareholders via a scheme of arrangement under Hong Kong’s Companies Ordinance.
Shares in Hang Seng Bank would be canceled in exchange for 155 Hong Kong dollars apiece, roughly 33% above Hang Seng’s average share price over the past 30 days of HK$116.5. HSBC owns around 63% of Hang Seng Bank, pegging the deal value at HK$106 billion.
HSBC shares in Hong Kong fell over 5%. London listed shares of HSBC declined over 6%.
“Our offer is an exciting opportunity to grow both Hang Seng and HSBC,” said HSBC Group Chief Executive Georges Elhedery. “We will preserve Hang Seng’s brand, heritage and customer proposition while investing to unlock new strengths in products, services and technology.”
He added that the deal underscores HSBC’s confidence in Hong Kong’s role as a leading global financial center and as a “super-connector” between international markets and mainland China.
The offer allows for adjustments reflecting any dividends declared after the announcement date, except Hang Seng’s third interim dividend for 2025.
“One of HSBC’s strategic priorities is to grow in Hong Kong,” the bank said in its filing statement, adding that it believes it is “best positioned” to do so by strengthening the Hong Kong banking presence of both HSBC Asia Pacific and Hang Seng Bank.
Hang Seng Bank is a core regional unit for London-based HSBC, with a substantial presence in the Hong Kong banking industry.
“Parent-subsidiary double listings are inherently problematic in terms of governance and in this sense it’s a positive and long-overdue move,” said Michael Makdad, senior analyst at Morningstar.
Hang Seng Bank has seen an uptick in bad loans in recent years, tied to its concentration in the Hong Kong and mainland China’s embattled real estate sectors.
In its 2025 first-half results, the bank stated that non-performing loans reached 6.69% of total loans and advances to customers, “primarily due to ongoing credit pressure in the property sector.” That’s up from 6.12% as of Dec. 31, 2024, and 5.32% as of June 30, 2024.
Source: CNBC