Zhi Tong Cai Jing·2025-10-09 15:10Core Viewpoint - HSBC Holdings announced a proposal to privatize Hang Seng Bank for a cash consideration of HKD 106 billion (approximately USD 13.6 billion), which will lead to a decrease in its CET1 capital ratio by 125 basis points [1] Group 1: Financial Impact - The cash offer translates to HKD 155 per share for minority shareholders [1] - The transaction is expected to reduce HSBC's share buyback scale by approximately USD 7 billion, with stock repurchases paused for three quarters to maintain the CET1 ratio within target range [1] - By the end of Q2 2026, HSBC's CET1 ratio is projected to be 14% [1] Group 2: Performance Metrics - HSBC's Hong Kong business is projected to have a ROTE of 38% for 2024, while Hang Seng Bank's ROE is reported at only 11% for the same period [1] Group 3: Market Reaction - Following the announcement, HSBC's stock price fell by 5%, closing at USD 67.89 [1] - Short-term expectations indicate a mid-single-digit percentage pullback in HSBC's stock price [1] - Despite the short-term challenges, the transaction is viewed positively for HSBC in the long run [1]