HSBC has announced a £10bn deal to take its Hong Kong subsidiary, Hang Seng Bank, private, acquiring the 36.5% of shares it does not already own. The move is designed to capitalise on Hong Kong’s role as a “super-connector” between China and global markets, according to the London-headquartered bank.
The acquisition, believed to be the largest bank takeover in Hong Kong in over a decade, will result in Hang Seng Bank’s shares being delisted from the local stock exchange. It underscores HSBC’s deepening commitment to Asia, where it generates the majority of its profits, despite ongoing concerns about Hang Seng’s exposure to China’s property downturn.
HSBC chief executive Georges Elhedery, who took over last year, described the deal as a “significant investment into Hong Kong’s economy, underscoring our confidence in this market and its future as a leading global financial centre, and as a super-connector between international markets and mainland China.” The announcement follows a company-wide shake-up by Elhedery that involved cost cuts, market exits, and a restructuring into eastern and western divisions.
In light of the £10bn expenditure, HSBC confirmed it will not conduct any further share buybacks over the next three quarters, prioritising capital levels. This news disappointed shareholders, with HSBC’s London-listed shares falling 5% on Thursday. AJ Bell investment director Russ Mould compared the reaction to “a toddler who has been told they can’t have another biscuit,” noting that while the deal makes strategic sense, it presents a significant challenge for Elhedery.
