Global banking giant HSBC has put forward a proposal to privatise Hong Kong's Hang Seng Bank (Hang Seng).
The London-headquartered bank owns approximately 63% of Hang Seng, and is proposing to fully privatise Hang Seng by a scheme of arrangement.
The HK$106 billion ($13.6 billion) privatisation offer values 100% of Hang Seng at HK$290 billion on an equity value basis. The all cash proposal includes an offer of HK$155 for each scheme share, representing a 33% premium over the undisturbed 30-days’ average closing price of HK$116.5 per share. The price is a 1.8 price-to-book multiple which is higher than Hong Kong peers.
If approved, Hang Seng will become a wholly owned subsidiary of HSBC Asia Pacific and will be delisted from the Hong Kong Stock Exchange (HKEX). In early trading on October 9 on the HKEX, Hang Seng's shares climbed 25.4% to HK$149.2.
However HSBC shares in Hong Kong fell as much as 6.78% to HK$103.1 as of 2.45pm on October 9 as the company said it would fund the acquisition by pausing share buybacks for nine months from the announcement, with the Hang Seng deal, if all is approved, expected to be sealed in H1 2026. The buyback announced on July 31, 2025, will proceed as usual.
The bank was established in 1933 and was first listed on HKEX in 1972 and has branches across Hong Kong, a subsidiary in mainland China, Hang Seng Bank (China), and a branch in Macau, offering banking to businesses and retail customers. HSBC first acquired a majority stake in Hang Seng in 1965.
Meanwhile, Luanne Lim, chief executive of HSBC Hong Kong, is expected to start as Hang Seng's chief executive officer (CEO) this month.
Hang Seng's profits attributable to shareholders fall 30% in the first half of 2025 to HK$6.88 billion as it struggles with the commercial property downturn in Hong Kong and mainland China. The bank made HK$18.38 billion profit attributable to shareholders in 2024, up 3% from 2023. The bank has a significant property loan portfolio and impaired loans reached 6.7% of gross loans in June 2025 up from 2.8% at the end of 2023.
HSBC said in a statement that “the proposal is in line with our strategy to increase leadership and market share in areas where we have clear competitive advantages and the greatest opportunities to grow and support our clients.”
The bank added: “We aim to grow in Hong Kong by strengthening the banking presence of HSBC Asia Pacific and Hang Seng, focusing on their relative strengths and competitive advantages, while allowing all customers to choose where to bank.”
Georges Elhedery, HSBC’s group CEO, said: “Our offer is an exciting opportunity to grow both Hang Seng and HSBC. We will preserve Hang Seng’s brand, heritage, distinct customer proposition and a branch network, while investing to unlock new strengths in products, services, and technology to deliver more choice and innovation for customers.”
He added: “Our offer also represents a significant investment into Hong Kong’s economy, underscoring our confidence in this market and commitment to its future as a leading global financial centre, and as a super-connector between international markets and mainland China.”
Elhedery, who has been in charge of a shake-up at the bank since becoming CEO, continued: “This proposal fully meets our criteria for value-accretive investments: it aligns with our strategy, enhances growth and scale, doesn't distract us from organic growth, and delivers greater shareholder value than buybacks. Together, HSBC and Hang Seng form a well-positioned platform with two iconic banking brands working side by side to deliver lasting value for customers, employees, and shareholders.”
Michael Makdad, senior equity analyst, at Morningstar, commented: “I think parent-subsidiary double listings are inherently problematic in terms of governance and in this sense it’s a positive and long-overdue move.”
Makdad added: “Of course, HSBC will need to pay a premium so it likely wouldn’t likely be positive in terms of my fair-value estimate for HSBC, but there should be some opportunities for cost synergies.”
The proposal will become effective subject to the satisfaction of conditions, including Hang Seng shareholder approvals, and sanction by the High Court in Hong Kong. More details on the offer were provided here. Linklaters helped advise HSBC on the deal.
The joint financial advisers to HSBC Holdings and HSBC Asia Pacific were BofA Securities and Goldman Sachs, while Morgan Stanley was financial adviser to Hang Seng.
HSBC is still on the look out for a chairman after Mark Tucker left on September 30 to return to Hong Kong to become chairman of life and health insurer AIA. Brendan Nelson has been interim chair since October 1.
