Banking giant HSBC has unveiled plans to take its troubled Hong Kong-listed subsidiary Hang Seng Bank private in a deal valuing the business at 290 billion Hong Kong dollars (£27.9 billion). The London-headquartered bank already owns around 63% of Hang Seng and is proposing to buy out the remaining shareholders.
HSBC is offering 155 Hong Kong dollars (£14.90) per share for the outstanding stock, representing a 30% premium on Wednesday's closing price. The bank would pay around 106.2 billion Hong Kong dollars (£10.2 billion) to acquire the remaining shares and de-list the business from the Hong Kong stock exchange.
Hang Seng, founded in 1933, is one of Hong Kong's largest domestic banks and was acquired by HSBC in 1965 in what was then a milestone deal. However, the subsidiary has struggled in recent years, hit hard by Hong Kong's property market slump and rising bad debts.
CEO outlines growth strategy
Georges Elhedery, HSBC's group chief executive, described the offer as "an exciting opportunity to grow both Hang Seng and HSBC". He said the bank would preserve Hang Seng's brand, heritage and branch network while investing in new products, services and technology.
HSBC will not conduct any share buybacks for the next three quarters to preserve cash reserves needed for the deal. The bank expects to complete the transaction in the first half of 2026, subject to regulatory approvals.
Strategic restructuring continues
The move comes after HSBC faced pressure from its largest shareholder, Ping An, in 2022 to split its Asian and Western businesses, though the bank successfully resisted those calls. HSBC has since launched a restructuring of Hang Seng and appointed a new chief executive for the unit.
The deal marks the latest step in an overhaul led by Elhedery since he took the top job last year. He has already reorganised HSBC into four new divisions and withdrawn from some business areas, while signalling potential cost-cutting opportunities through "greater alignment" between HSBC and Hang Seng operations.
Sources used: "PA Media" Note: This article has been edited with the help of Artificial Intelligence.
