Mexico City, Mexico — Shares of Hang Seng Bank surged nearly 30 percent on Thursday following HSBC’s announcement regarding its plan to take the bank private. The deal, valued at more than 290 billion Hong Kong dollars (approximately $37 billion), highlights HSBC’s commitment to bolstering its presence in the Hong Kong market.

In a formal request, HSBC has urged Hang Seng Bank’s board to formulate a privatization proposal for shareholders, which would be executed under the framework of Hong Kong’s Companies Ordinance. If successful, Hang Seng Bank’s shares would be purchased at 155 Hong Kong dollars each, a premium of about 33 percent over the bank’s 30-day average share price of HK$116.5. HSBC is currently the largest shareholder, owning approximately 63 percent of Hang Seng Bank, inferring a deal value around HK$106 billion.

Despite the positive market response for Hang Seng Bank, HSBC’s stock took a hit, plummeting over 5 percent in Hong Kong trading. The offer from HSBC includes provisions for adjustments related to any dividends declared after the announcement date, although it excludes consideration of Hang Seng’s third interim dividend for 2025.

HSBC emphasized in its filing that expanding operations in Hong Kong remains a priority. The bank stated that a more integrated approach between HSBC Asia Pacific and Hang Seng Bank will enhance their competitive positioning within the local banking landscape.

Michael Makdad, a senior analyst at Morningstar, praised the move, describing it as a necessary change for governance. He pointed out that the complexities involved in parent-subsidiary double listings have long posed challenges, making this a welcome adjustment for stakeholders.

As a key component of HSBC’s regional strategy, Hang Seng Bank has established a significant foothold in Hong Kong’s banking sector. The strategy aims not only to strengthen their current operations but also to foster a more cohesive financial entity that can respond swiftly to market demands.

With this bold step, HSBC is positioning itself to deepen its influence within Hong Kong, a region pivotal to its global strategy. Investors and market analysts alike will be watching closely to see how this privatization unfolds, especially its implications for HSBC and its long-term growth trajectory in the Asia-Pacific region.