- The proposal marks a shift in HSBC’s strategy from cost-cutting to major acquisitions.
- The bid reportedly values Hang Seng Bank at HK$290 billion ($37 billion).
HSBC made a move to tighten its grip on Asian banking after offering HK$106.1 billion ($13.6 billion) to buy out minority shareholders of Hang Seng Bank and take the lender private.
According to the company’s announcement, the deal marks a shift from cost-cutting to large-scale acquisition and signals HSBC’s long-term commitment to Hong Kong amid economic turbulence.
The bank said it will offer HK$155 per share for the 36.5 percent of Hang Seng Bank it does not already own, representing a 30 percent premium over the last closing price. The proposal reportedly lifts Hang Seng’s valuation to HK$290 billion ($37 billion) and would result in one of the region’s largest banking takeovers in years.
HSBC CEO Georges Elhedery dismissed suggestions that the acquisition was designed to rescue Hang Seng, which has struggled with rising loan impairments from Hong Kong’s property downturn. He instead framed the move as a strategic consolidation.
The deal stands in contrast to HSBC’s recent restructuring efforts, which included divesting operations in Canada, Argentina and parts of Europe to simplify its balance sheet.
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Buybacks Paused To Build Capital
However, Hong Kong emerged as a core standalone business within HSBC’s new operating model last year, reinforcing the bank’s long-standing dependence on the market, which contributes the largest share of its profits.
HSBC argued that delisting Hang Seng Bank would enable tighter operational integration while reducing duplication. Elhedery said the acquisition would be more accretive to shareholder value over time than continuing buybacks.
Despite the planned buyout, HSBC pledged to retain Hang Seng’s distinct brand and customer proposition in Hong Kong. The bank stressed that the lender’s Chinese heritage and deep retail presence remain valuable assets that complement HSBC’s broader Asia franchise.
The proposal will reportedly proceed by way of a scheme of arrangement and is subject to approval by Hang Seng minority shareholders and regulators in Hong Kong. If completed, it would mark HSBC’s largest investment in Hong Kong in years and underline its determination to reinforce its dominant position in the city’s financial sector.
