HSBC proposes to privatize Hang Seng Bank by scheme of arrangement

HSBC (HSBC) announced that HSBC Group, together with The Hongkong and Shanghai Banking Corporation Limited, a wholly owned subsidiary of HSBC, has put forward a conditional proposal to privatize Hang Seng Bank Limited through a scheme of arrangement. If approved, the Proposal would result in HSBC Asia Pacific acquiring all remaining shares of Hang Seng held by the minority shareholders and the withdrawal of listing of the Hang Seng shares from the Hong Kong Stock Exchange. The Proposal offers a Scheme Consideration of HK$155 for each Scheme Share, representing a 33% premium over the undisturbed 30-days average closing price of HK$116.5 per share. The valuation of Hang Seng implied by the Scheme Consideration is HK$290 billion, representing a 1.8x 1H25A price-to-book multiple, which is significantly higher than comparable Hong Kong peers. This offer is final and will not be increased further, HSBC said. HSBC Group will fund the Scheme Consideration with its own financial resources. The expected day one capital impact of the Proposal is approximately 125 basis points which would arise following the approval of the relevant resolutions by the requisite majority at each of the Hang Seng Court Meeting and the Hang Seng General Meeting. HSBC expects to restore its CET1 ratio to its target operating range of 14.0%-14.5% through a combination of organic capital generation and not initiating any further buybacks for three quarters following the date of this announcement.