Jing Ji Guan Cha Wang·2025-10-13 11:09Core Viewpoint - HSBC Holdings and Hang Seng Bank announced a proposal for the privatization of Hang Seng Bank, with HSBC Asia offering HKD 155 per share, representing a 33% premium over the average closing price of HKD 116.5 over the last 30 trading days, valuing Hang Seng Bank at HKD 290 billion, which is 1.8 times its book value for the first half of 2025 [1][2]. Group 1 - HSBC's privatization strategy aims to streamline operations and enhance investment opportunities in Hong Kong [1][2]. - The proposal is perceived as high by the market, especially given Hang Seng Bank's declining profits, with a 30.46% drop in shareholder profit to HKD 6.88 billion and a 28.39% decrease in pre-tax operating profit [2]. - HSBC plans to finance the acquisition using internal resources, which is expected to reduce its Common Equity Tier 1 (CET1) capital ratio by approximately 125 basis points [3]. Group 2 - HSBC's decision to halt share buybacks for the next three quarters is seen as a move to stabilize its capital ratio, targeting a CET1 ratio of 14% to 14.5% [3][4]. - The market response has been negative, with HSBC's stock price declining over 7% following the announcement of the privatization [3]. - Investors are concerned about the impact of geopolitical risks and economic uncertainties, leading some to shift investments away from HSBC [4]. Group 3 - HSBC is actively involved in managing Hang Seng Bank's non-performing real estate loans, facilitating the sale of over USD 3 billion in assets [5]. - Hang Seng Bank's commercial real estate loan quality is under pressure, with significant increases in credit impairment [5]. - The collaboration aims to enhance business synergies between HSBC and Hang Seng Bank, allowing for a focus on wealth management and other growth areas [5][6]. Group 4 - Post-privatization, Hang Seng Bank will retain its identity as an independent licensed bank, maintaining its management structure and brand [6]. - There is potential for future capital operations, including the possibility of a spin-off listing if business synergies lead to significant performance improvements [6].