HSBC, together with its subsidiary HSBC Asia Pacific, has announced a proposal to privatise Hang Seng Bank through a deal valued at HK$106.1bn ($13.63bn). 

Under this proposal, HSBC Asia Pacific would acquire all remaining shares of Hang Seng Bank, held by minority shareholders at HK$155 ($19.92) for each share. 

Also, Hang Seng shares will be delisted from the Hong Kong Stock Exchange. 

The offer reflects a 33% premium over the undisturbed 30-day average closing price of HK$116.5 ($14.9), and values Hang Seng at HK$290bn ($37.2bn). 

This valuation exceeds that of comparable peers in Hong Kong, indicating its confidence in the proposal’s fairness and attractiveness, said HSBC. 

HSBC Group CEO Georges Elhedery said: “We will preserve Hang Seng’s brand, heritage, distinct customer proposition and branch network, while investing to unlock new strengths in products, services, and technology to deliver more choice and innovation for customers. 

“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.” 

HSBC stated that this offer is final and will not be increased further, and the move aligns with its strategic priorities. 

The proposal provides immediate cash returns to Hang Seng shareholders, allowing them to benefit from HSBC’s investment without waiting for future dividends. 

HSBC aims to enhance its presence in Hong Kong, a key market for the bank, while maintaining the distinct identity and operations of Hang Seng. 

The bank plans to retain Hang Seng’s brand, heritage, and governance structure, ensuring continued access to its products and services for existing customers. 

HSBC intends to finance the transaction using its own resources, with an expected initial capital impact of approximately 125 basis points. 

Upon closing of the transaction, HSBC anticipates restoring its Common Equity Tier 1 (CET1) ratio to its target operating range of 14.0%-14.5%. 

The bank has also confirmed that it will not initiate further share buybacks for three quarters, although a previously announced buyback will proceed as planned. 

HSBC aims for a dividend payout ratio of 50% of earnings per ordinary share for 2025, excluding material notable items. 

Elhedery added: “This proposal fully meets our criteria for value-accretive investments: it aligns with our strategy, enhances growth and scale, does not 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.” 

Earlier this year, Hang Seng Bank announced a restructuring initiative that would result in job losses for approximately 1% of its core workforce.