HSBC Holdings announced plans on Thursday to privatise Hang Seng Bank, one of Hong Kong’s leading lenders, in a HK$106.1 billion ($13.63 billion) deal amid growing scrutiny of the subsidiary’s performance and exposure to the city’s and mainland China’s weakening property sectors.
Under the proposed terms, HSBC will offer HK$155 per share for the 36.5% stake it does not already hold, valuing Hang Seng Bank at around $37 billion. The offer represents a 30.3% premium on the bank’s closing share price of HK$119 on Wednesday.
Shares in Hang Seng Bank surged as much as 41% in early trading, reaching HK$168, before easing to HK$150.3 by midday, still 26.3% higher on the day but below the offer price. Meanwhile, HSBC’s own Hong Kong-listed shares fell 6.2% to HK$103.7 by the midday break, underperforming the Hang Seng Index, which slipped just 0.15%.
If completed, the deal would mark Hong Kong’s largest banking acquisition in more than a decade, following OCBC’s $5.3 billion purchase of Wing Hang Bank in 2014, according to Michael Makdad, senior equity analyst at Morningstar.
“This is an investment for the medium- to long-term in what is a leading local bank in Hong Kong, an iconic franchise, distinct and unique customer proposition and a strong financial standing with very good liquidity ratios and capital ratios,” HSBC CEO Georges Elhedery told reporters on Thursday.
The planned privatisation contrasts with HSBC’s recent retreat from several global markets under Elhedery’s leadership. Since taking over in 2024, the CEO has overseen a sweeping restructuring that included divestments and wind-downs across Europe, North America, and parts of Asia Pacific. Following this overhaul, Hong Kong emerged as one of HSBC’s four core divisions, highlighting its continued strategic importance to the group.
HSBC said Hang Seng Bank would continue operating under its existing brand and management structure, but the transaction represents a major vote of confidence in Hong Kong’s financial future.
To fund the buyout, HSBC plans to pause its share buyback programme for around three quarters to accumulate sufficient capital for the transaction. The Hong Kong Monetary Authority (HKMA) confirmed it had been in discussions with the banks and would continue to engage throughout the process.
“We take note of HSBC Holdings’ stated rationale for the transaction being investing significantly into Hong Kong,” the HKMA said in a statement.
HSBC said the deal would reduce its common equity tier 1 (CET1) ratio by approximately 125 basis points, from 14.6% as of June, but it expects to restore the ratio to its target range of 14.0% to 14.5% through organic capital generation and by pausing share buybacks.
The bank stressed that the offer price is final and that it does not intend to revise it.
