【Epoch Times News, January 12, 2026】
Hang Seng Bank is well-capitalized, with stable interest margins and a controlled bad debt ratio. However, this local bank that has accompanied generations of people in Hong Kong will exit the capital market. On January 8, the privatization proposal put forward by HSBC Holdings was approved at court meetings and shareholder meetings. Hang Seng Bank will withdraw its listing status as early as January 27, ending its over half a century of history on the Hong Kong Stock Exchange.
Hang Seng’s profitability has not collapsed, but its valuation has long been suppressed at historical lows. The issue lies not in its operations, but in Hong Kong’s economic growth expectations, commercial property risks, and the discount of international funds on the Hong Kong financial system. On the surface, this is a privatization driven by shareholders voting with their feet. Deeper down, it reflects a collective discount on the future expectations of the Hong Kong market.
“Privatization” refers to the process of transforming a listed company into one held by private shareholders or a single institution through acquisitions or share transfers, thus delisting it from the exchange and ending its public ownership status. This procedure is usually initiated by the controlling shareholder (major shareholder), aiming to fully acquire the outstanding shares held by retail investors and other small shareholders in the market, and subsequently revoke the company’s listing qualifications, turning it into a privately traded enterprise.
Why is HSBC privatizing Hang Seng? Privatization can save HSBC and Hang Seng substantial costs for regulatory compliance and operations in Hong Kong. After privatization, 100% of the profits and capital will belong to HSBC, optimizing the group’s capital structure. HSBC can directly and flexibly deploy Hang Seng’s capital without the need for further approvals or concerns about other shareholders taking action. After privatization, there is no longer a need to publicly disclose financial data, allowing HSBC to handle bad debts at a group level more flexibly and avoid individual information disclosures that could cause market panic.
On the transaction front, the offer price of HK$155 represents a premium of over thirty percent above the recent average stock price. Several international proxy advisers and institutional shareholders have also voted in favor. However, both inside and outside the venue, long-term shareholders who have held their stakes for decades have cast dissenting votes, unable to conceal their reluctance.
This hesitation is not about denying Hang Seng’s operational capabilities. Rather, it’s more like an intuitive reaction to the reality in Hong Kong: when a locally profitable bank has long been undervalued in the public market, is the issue with the company itself or other factors?
Externally, this appears to be a transaction of clear premium and smooth process: HSBC proposed a cash offer of HK$155 per share, representing a premium of approximately thirty-three percent over the 30-day average closing price of HK$116.49 as of October 8, 2025, implying a price-to-book ratio of around 1.8 times. HSBC Holdings officially proposed the privatization of Hang Seng Bank on October 9, 2025, with the 30 trading days prior to October 8 as the reference period.
Price-to-Book Ratio is a tool for measuring stock valuation. The calculation is: Price-to-Book Ratio = Stock Price / Book Value per Share.
A value larger than 1 indicates that the stock price is higher than the company’s book value; a value less than 1 means the stock price is lower than the company’s book value, indicating relative cheapness.
However, both inside and outside the venue, the discussions sparked by this transaction go beyond the question of whether HK$155 is reasonable. For many Hong Kong investors, the delisting of Hang Seng Bank feels like a familiar yet hard-to-express farewell.
Some small shareholders who have held their stakes for decades have firmly cast dissenting votes, not solely due to dissatisfaction with the offer price, but out of emotional attachment to Hang Seng Bank as a “local bank brand.” They are concerned that even if the brand and license are preserved after privatization, Hang Seng’s autonomy in strategy and positioning may still shrink further.
Hang Seng Bank has long been seen as a core part of Hong Kong’s local retail banking system, with its mortgage loans, citizen savings, and small and medium enterprise financing closely tied to the Hong Kong economic cycle. For some investors, the delisting of Hang Seng Bank not only means the disappearance of a stock but also symbolizes the departure of a representative local financial symbol in the Hong Kong capital market.
From a fundamental perspective, Hang Seng Bank does not have issues with operational disorder. According to Hang Seng Bank’s mid-year performance announcement in 2025, as of the end of June 2025, Hang Seng realized a profit attributable to shareholders of approximately HK$6.88 billion, with a stable net interest margin at 1.99% and a capital adequacy ratio higher than regulatory requirements.
Statistics from the Hong Kong Monetary Authority also show that the overall banking system’s capital and liquidity conditions are stable, although the non-performing loan ratio has increased, it remains within a controllable range compared to comparable economies internationally.
In other words, Hang Seng’s profitability has not “collapsed.” Its privatization stems not from deteriorating operations or insufficient capital but from the long-standing valuation dilemma faced by Hang Seng and the entire Hong Kong banking sector.
Firstly, it’s due to Hong Kong’s economic growth falling short of expectations. Private consumption and gross fixed capital formation in Hong Kong showed a slow recovery between 2024 and 2025. In the face of uncertain growth prospects, bank stocks, as typical procyclical assets, find it challenging to attain valuation premiums.
Secondly, commercial property risks continue to suppress bank asset quality. In recent years, office and retail property vacancy rates have risen, with significant rent adjustments. International credit rating agencies Moody’s and Standard & Poor’s have repeatedly warned of Hong Kong banks’ exposure to local commercial property risks. This is one of the key variables investors are concerned about; although the current level of bad debts remains manageable, the market has already priced in potential risks.
Thirdly, it’s a structural factor, with international funds discounting the risks of the Hong Kong financial system. Several international institutions have pointed out in research reports that geopolitical uncertainties, expectations of capital flow restrictions, and changes in the regulatory environment have led to some long-term funds applying higher discount rates to Hong Kong financial assets.
Against this backdrop, Hang Seng Bank’s price-to-book ratio has hovered around 1 in the past two years, significantly lower than its historical range and below some international peers. The implied price-to-book ratio of 1.8 proposed in the privatization is a correction to the long-term undervaluation in the market.
HSBC reiterated that the privatization is a long-term investment in the Hong Kong market and pledged to preserve Hang Seng Bank’s independent brand, banking license, and corporate governance structure. From the controlling shareholder’s perspective, in situations where the public market fails to reflect asset values adequately, reclaiming quality assets into the system aligns with capital allocation logic.
However, from the perspective of the Hong Kong capital market, the signals released by this transaction are more complex: when a locally profitable bank with a stable dividend record chooses to exit the capital market, it reflects the challenges faced by the market’s overall pricing mechanism.
The delisting of Hang Seng Bank may not be the end, but undoubtedly, it poses an unavoidable question for the Hong Kong capital market: what kind of market structure will remain when high-quality mature assets struggle to obtain reasonable pricing in the public market?