Global Banking Giant Bets Big on Hong Kong with $37 Billion Privatization Bid

HSBC Holdings Plc announced plans to acquire full ownership of its Hong Kong–based subsidiary, Hang Seng Bank Ltd., in a transaction estimated at about $37 billion, according to a statement released on Thursday. The move underscores the British bank’s intent to deepen its presence in Hong Kong as the city manages a slow economic recovery.

Under the proposal, HSBC would purchase the remaining publicly listed shares of Hang Seng Bank for HK$155 per share (approximately US$19.92), representing roughly a 30 percent premium over the stock’s last closing price. The shares held by public investors would be canceled once the transaction is completed.

The London-headquartered lender currently owns around 63 percent of Hang Seng Bank. It plans to spend about $14 billion to buy out minority shareholders and, in turn, suspend share repurchases for the next three quarters to rebuild capital levels. In remarks reported by Bloomberg, HSBC Chief Executive Georges Elhedery said the acquisition would “deliver greater value to shareholders than buybacks” and reaffirm the bank’s confidence in Hong Kong’s financial sector.

Market reaction was mixed: Hang Seng Bank shares surged more than 25 percent in early Hong Kong trading, while HSBC’s own shares fell by more than 5 percent, according to data from the Hong Kong Stock Exchange.

Analysts interpret the buyout as part of HSBC’s ongoing realignment toward Asia. Over the past two years, the bank has reduced its footprint in Europe and North America, selling noncore assets and reorganizing into four new global divisions. The privatization of Hang Seng Bank, long one of Hong Kong’s most recognized financial brands, fits within that broader strategy.

The announcement also comes at a challenging time for Hong Kong’s banking system. The Hong Kong Monetary Authority (HKMA) reported that credit-impaired loans tied to commercial real estate at Hang Seng Bank rose about 80 percent year-on-year to HK$25 billion (US$3.2 billion) by mid-2025. The credit deterioration reflects a prolonged property slump; Fitch Ratings has estimated around HK$200 billion (US$25 billion) in troubled loans across the sector. Despite this, Elhedery emphasized that the transaction was “a growth investment” and “unrelated to existing debt exposures,” according to Reuters.

In an interview cited by Morningstar, analyst Michael Makdad described the plan as “a positive and overdue move,” noting that maintaining both parent and subsidiary listings creates governance inefficiencies. He added that the generous premium should satisfy minority shareholders who might otherwise remain exposed to property-related risks.

Elhedery said that full ownership would allow Hang Seng Bank to broaden its service offerings and take advantage of HSBC’s global network while preserving the local bank’s independent governance framework. The HKMA confirmed that it is in discussion with both institutions to review the regulatory aspects of the proposed deal.