HSBC plans to privatise Hang Seng Bank and delist its shares

HSBC is planning to privatise its majority-owned subsidiary, Hang Seng Bank, and withdraw its shares from listing.

According to the joint announcement released on the Hong Kong Stock Exchange (HKEX), HSBC Asia Pacific, as the offeror, has requested the Hang Seng Bank board to present the proposal for the privatisation of Hang Seng Bank to the scheme shareholders through a scheme of arrangement under Section 673 of the Companies Ordinance.

If the scheme becomes effective, the scheme shares will be cancelled in exchange for the scheme consideration of HK$155 in cash for each scheme share held, valuing the deal at approximately HK$106.1 billion for the purchase of the 36.5% of shares not already owned by HSBC.

The offer was made at a 30.3% premium to Hang Seng Bank's closing price of HK$119 on Wednesday, according to the announcement. The scheme consideration will not be increased and neither HSBC Holdings nor HSBC Asia Pacific reserves the right to do so. 

Upon the scheme becoming effective, all of the scheme shares will be cancelled and the share certificates for the scheme shares will thereafter cease to have effect as documents or evidence of title.

HSBC stated that Hong Kong is a key home market and strategic priority, with strong economic fundamentals and significant medium-term growth opportunities. However, it is also an increasingly competitive market, requiring HSBC Asia Pacific and Hang Seng Bank to align better and respond swiftly to market and customer needs.

“By privatising Hang Seng Bank, HSBC can greatly simplify the structure of its Hong Kong operations, and further align the economic incentives for HSBC to increase its investments in Hang Seng Bank, leveraging both brands whilst simplifying and streamlining decision-making processes to be more agile."

The privatisation will also enable improved operational risk management, as well as capital efficiency and deployment. Furthermore, there is an opportunity for better alignment of Hang Seng Bank and HSBC’s operations, which may result in greater operational leverage and efficiencies, it added.

Post-privatisation, Hang Seng Bank will maintain its separate authorisation as a licensed bank under the Hong Kong Banking Ordinance, with its own governance, brand, and branch network. The announcement assured that customer interactions will remain unchanged, with customers retaining their account details and relationship managers, where applicable. Additionally, customers will gain greater access to HSBC’s full product suite and global network. HSBC plans to invest in technology across both brands, enhancing efficiency and innovation for customers.

In response to HSBC's plan to privatise Hang Seng Bank, a spokesperson from the Hong Kong Monetary Authority (HKMA) said in a statment to MARKETING-INTERACTIVE that it is aware of the plan and has been in communication with the concerned banks regarding the relevant regulatory approvals in accordance with established mechanisms and procedures. The HKMA has noted HSBC Holdings' stated rationale for the transaction, which includes significant investment in Hong Kong. Upon completion, the Hongkong and Shanghai Banking Corporation and Hang Seng Bank will continue to operate as two separate authorised institutions. The authority will maintain dialogue with the relevant banks.

MARKETING-INTERACTIVE has reached out to Hang Seng Bank for a statement. 

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