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HSBC has proposed a HK$106bn ($13.6bn) transaction to delist its local Hong Kong lender Hang Seng Bank as Europe’s largest bank presses ahead with a restructuring plan.
HSBC has offered to pay HK$155 a share, a 30 per cent premium over Wednesday’s closing price, to take Hang Seng fully private in an all-cash deal that values it at HK$290bn.
UK-headquartered HSBC took control of Hang Seng during a banking crisis in 1965. It ranks among the global bank’s most significant acquisitions alongside the UK’s Midland Bank in 1992.
Hang Seng has been hard hit by Hong Kong’s recent property slump, with its non-performing loan ratio at 6.7 per cent at the end of June — an all-time high.
HSBC had already kicked off a restructuring at Hang Seng, bringing in a new chief executive in October.
“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,” said group chief executive Georges Elhedery.
“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 superconnector between international markets and mainland China.”
In an internal email to staff Elhedery added that he expects “an opportunity to create greater alignment across HSBC and Hang Seng Bank that may result in better operational leverage and efficiencies”.
