Hang Seng Bank shares up 26% after HSBC offers buyout

Privatisation offer set at HK$155 a share, a 30% premium over the Oct 8 closing price

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HSBC Holdings plans to take Hang Seng Bank private in a deal that values the lender at US$37 billion (S$48 billion), ramping up its exposure to Hong Kong as the financial hub attempts to bounce back from years of economic turbulence.

The price was set at HK$155 per share in cash, a premium of about 30 per cent over the last closing price, HSBC said in a statement on Oct 9. The publicly listed shares would be cancelled under the proposal.

“Through this significant investment, it demonstrates our commitment to the economy of Hong Kong,” chief executive Georges Elhedery said in an interview with Bloomberg Television.

HSBC, based in London, currently owns about 63 per cent of Hang Seng Bank and will spend about US$14 billion buying up the shares it does not already hold. The lender plans to refrain from share buybacks in the coming three quarters as it seeks to restore its capital ratio to its operating range.