HSBC proposes $13.6 billion privatisation of Hang Seng Bank

STORY: HSBC plans to privatize Hong Kong's Hang Seng Bank in a deal worth $13.63 billion.It comes after Hang Seng Bank was criticized for its performance and exposure to struggling property markets in Hong Kong and mainland China.HSBC aims to buy out the 36.5% of shares it doesn't already own in its subsidiary, and has given it a total valuation of $37 billion.Hang Seng Bank shares surged more than a quarter in early trading before falling back in the afternoon.HSBC shares fell 6% in London from near record levels in morning trade.The move is a change in pattern for HSBC after market exits under CEO Georges Elhedery.The lender has sold off or wound down businesses across Europe, North America and some Asia Pacific markets.The offer will keep Hang Seng Bank's separate brand.Elhedery said in a statement it shows HSBC's confidence in the Hong Kong market.He added HSBC would pause its share buybacks for about three quarters to build up the capital needed for the acquisition.Hang Seng Bank has reported rising bad loans over the last few years due to its exposure to property markets in Hong Kong and mainland China.It was reported last year HSBC started planning to tighten risk management at Hang Seng Bank.Elhedery denied the move was a 'bailout' given the worsening loan book and further said the lenders had communicated about Hang Seng Bank's real estate exposure.

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