HSBC Holdings plc has announced that HSBC Group, together with The Hongkong and Shanghai Banking Corporation Asia-Pacific, has put forward a conditional proposal to privatise Hang Seng Bank through a scheme of arrangement.
If approved, the proposal would result in HSBC Asia Pacific acquiring all remaining shares of Hang Seng held by the minority shareholders and the withdrawal of listing of the Hang Seng shares from the Hong Kong Stock Exchange.
The proposal offers a scheme consideration 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. This represents an attractive and significant premium to Hang Seng’s historical trading prices, and analyst consensus targets, and is more than Hang Seng’s highest share price in 3.5 years, the announcement says.
The valuation of Hang Seng implied by the scheme consideration is HK$290 billion, representing a 1.8x 1H2025 price-to-book multiple, which is significantly higher than comparable Hong Kong peers. This offer is final and will not be increased further, underscoring HSBC’s confidence in the fairness and attractiveness of the offer.
Through this proposal, HSBC is providing Hang Seng minority shareholders with an opportunity for immediate cash realisation, enabling them to realise the benefits from HSBC’s investment in Hang Seng without needing to wait for future dividends.
The proposal is aligned with HSBC’s strategic priority to grow its business in Hong Kong while becoming simple and agile. Hong Kong is one of HSBC’s home markets and HSBC benefits from the proud heritage and brand strength of both HSBC Asia-Pacific and Hang Seng.
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The proposal represents a significant investment into Hong Kong, which underlines our confidence in the growth potential for both HSBC Asia-Pacific and Hang Seng. The Proposal will unlock opportunities for further investment and improvements in operational leverage.
HSBC recognises the proud legacy and near-100-year history of Hang Seng and is committed to retaining Hang Seng’s separate authorisation as a licensed bank under the Hong Kong Banking Ordinance with its own governance, brand, distinct customer proposition and a branch network. Hang Seng’s existing customers will continue to enjoy Hang Seng’s products and services while gaining greater access to the full breadth of HSBC’s global network and full product suite, the announcement says.
HSBC Group will fund the scheme consideration with its own financial resources. The expected day one capital impact of the proposal is approximately 125 basis points which would arise following the approval of the relevant resolutions by the requisite majority at each of the Hang Seng Court Meeting and the Hang Seng General Meeting.
HSBC expects to restore its CET-1 ratio to its target operating range of 14.0%-14.5% through a combination of organic capital generation and not initiating any further buybacks for three quarters following the date of this announcement.
A decision to recommence buybacks will be subject to HSBC’s normal buyback considerations and process on a quarterly basis.
The share buyback announced on July 31 will continue in accordance with its terms. HSBC continues to target a dividend payout ratio for 2025 of 50% of earnings per ordinary share excluding material notable items and related impacts.
HSBC expects that this investment in Hang Seng will be accretive to earnings per ordinary share.
