LONDON: HSBC Holdings PLC has proposed to privatise its Hong Kong-based subsidiary Hang Seng Bank Ltd through a scheme of arrangement, offering HK$155 per share in cash for the 36.5% stake it does not already own.
The deal values the transaction at approximately HK$106.1 billion (US$13.6 billion).
The proposal, submitted by HSBC Asia Pacific, is subject to shareholder and court approval under Section 673 of Hong Kong’s Companies Ordinance. If approved, Hang Seng Bank will be delisted from the Hong Kong Stock Exchange and become a wholly owned subsidiary of HSBC Holdings.
HSBC confirmed the offer price is final and will not be increased. Shareholders will receive the 2025 third interim dividend, which will not be deducted from the scheme consideration. However, any other dividends declared before the scheme’s effective date will be adjusted against the offer.
Hang Seng Bank, with nearly a century of operations in Hong Kong, will retain its brand, governance structure, and banking license post-privatisation. HSBC emphasized its commitment to preserving Hang Seng’s legacy and continuing support for its community initiatives.
The scheme will be financed entirely through HSBC’s internal resources. BofA Securities and Goldman Sachs, acting as joint financial advisers, have confirmed the availability of sufficient funds to meet the scheme consideration.
HSBC expects the transaction to be accretive to earnings per share, citing the removal of minority interest deductions. The bank’s CET1 ratio stood at 14.6% as of June 30, 2025, and is projected to decline by approximately 125 basis points upon completion. HSBC plans to restore its capital ratio through organic generation and a pause in share buybacks for three quarters.
The Hang Seng Bank Board has formed an Independent Board Committee (IBC) comprising five independent non-executive directors to evaluate the fairness of the proposal. An independent financial adviser will be appointed to assist the IBC, with a further announcement pending.
The transaction is classified as a discloseable transaction under Hong Kong Listing Rules but does not meet the threshold for a significant transaction under UK Listing Rules.