Hang Seng Bank stock surged 29.5% on Thursday following an announcement by its parent company HSBC to take it private, which estimates the lender’s worth at over 290 billion Hong Kong dollars (more than $37 billion).
HSBC, the largest bank in Europe, has requested the board of Hang Seng Bank to present a proposal for privatization to shareholders through a scheme of arrangement according to Hong Kong’s Companies Ordinance.
Hang Seng Bank shares would be annulled in exchange for 155 Hong Kong dollars each, approximately 33% higher than Hang Seng’s average share price of HK$116.5 over the last 30 days. HSBC holds about 63% of Hang Seng Bank, assigning a deal value of HK$106 billion.
HSBC stock in Hong Kong declined by over 5%.
“Our proposal presents an exciting opportunity to enhance both Hang Seng and HSBC,” stated Group Chief Executive Georges Elhedery. “We will maintain Hang Seng’s identity, heritage, and customer value while investing to unveil new capabilities in products, services, and technology.”
He further emphasized that the agreement highlights HSBC’s trust in Hong Kong’s position as a prominent global financial hub and its role as a “super-connector” between international markets and mainland China.
The offer includes provisions for adjustments based on any dividends declared post-announcement, excluding Hang Seng’s third interim dividend for 2025.
“One of HSBC’s key strategic goals is to expand in Hong Kong,” the bank noted in its filing statement, asserting that it is “ideally suited” to achieve this by bolstering the Hong Kong banking operations of both HSBC Asia Pacific and Hang Seng Bank.
Hang Seng Bank represents a vital regional entity for London-based HSBC, having a significant footprint in Hong Kong’s banking sector.
“Having double listings for parent-subsidiary relationships often leads to governance issues, making this a beneficial and much-needed transition,” remarked Michael Makdad, senior analyst at Morningstar.
Hang Seng Bank has experienced a rise in non-performing loans in recent years, associated with its focus on Hong Kong and mainland China’s struggling real estate markets.
In its 2025 first-half financial results, the bank reported that non-performing loans constituted 6.69% of total loans and advances to customers, “largely due to ongoing credit challenges in the property market.” This is an increase from 6.12% as of December 31, 2024, and 5.32% as of June 30, 2024.
