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HSBC Holdings PLC on Thursday said it will pause share buybacks after making an offer to buy out minority investors in Hong Kong lender Hang Seng Bank Ltd. In response, shares in the London-based lender focused on Asia fell 5.8% to 1,004.60 pence each in London on Thursday morning. It was the worst-performing stock on the FTSE 100, which was down 0.4%. HSBC has offered HK$155 per share, around $19.92, for the 37% of Hang Seng Bank it does not already own. The offer values Hang Seng Bank at HK$290.31 billion, and HSBC’s holding at HK$106.16 billion, or $13.62 billion. Shares in Hang Seng Bank closed up 26% at HK$149.60 in Hong Kong on Thursday for a market value of HK$280.42 billion. HSBC said the price reflects the potential value of the development of the business of Hang Seng Bank in the next few years. The FTSE 100-listing expects the deal, which will be funded from internal resources, to be accretive to earnings per ordinary share as a result of the removal of the minority interest earnings deduction related to Hang Seng Bank. But it will not make any further share buybacks for the three quarters, following the announcement of the deal, as it looks to restore its CET1 ratio to its target operating range of 14.0% to 14.5%. A decision to recommence buybacks will be subject to HSBC’s normal buyback considerations and process on a quarterly basis, the bank added. HSBC estimates the impact on its CETI ratio from the deal to be around 125 basis points. HSBC’s latest published CET1 ratio is 14.6% as of June 30. The bank said it continues to target a dividend payout ratio for 2025 of 50% of earnings per ordinary share, excluding material notable items and related impacts. HSBC said the privatisation will enable it to better capitalise on growth opportunities in Hong Kong, fully utilising both the HSBC Asia Pacific and Hang Seng Bank franchises. ‘By privatising Hang Seng Bank, HSBC can greatly simplify the structure of its Hong Kong operations, further align the economic incentives for HSBC to increase its investments in Hang Seng Bank, leveraging both brands whilst simplifying and streamlining decision-making processes to be more agile,’ the bank said in a statement. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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