HSBC Holdings announced a plan to privatise its Hang Seng Bank subsidiary, drawing the curtains on half a century of the unit’s publicly traded status amid worsening real estate loans in Hong Kong.
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The London-based bank would buy all outstanding Hang Seng Bank shares for HK$155 each in cash, or a premium of 30 per cent over the stock’s Wednesday closing price of HK$119, according to a statement to the Hong Kong exchange on Thursday. The Hang Seng shares would be cancelled after the purchase, according to the plan.
“The benefit of HSBC as a 100 per cent shareholder is it gives Hang Seng Bank even more flexibility to manage its capital and its ratios more efficiently [under] the umbrella of HSBC”, the group’s CEO Georges Elhedery said during a media round table in Hong Kong after announcing the privatisation. “The [plan] is a long-term strategic investment for growth, which we see as value-accretive for all shareholders in the long term.”
Hang Seng Bank, which traces its establishment to Hang Seng Ngan Ho in 1933, will retain its brand, its branch network, its 11-member board, its license under Hong Kong’s banking ordinance and its “proposition” to customers, Elhedery said.
Hang Seng Bank was sold to HSBC in 1965 after a bank run wiped out almost a quarter of its reserves. Over time, HSBC increased its ownership of Hang Seng Bank to almost 63 per cent, from the initial 51 per cent controlling stake. Hang Seng Bank was listed on the Hong Kong stock exchange in 1972.
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