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HSBC plans to take over Hong Kong-listed business hang Seng The private has taken a step forward after getting the approval of the board committee.
The independent committee formed by Hang Seng’s board of directors said it believes the proposed privatization is “fair and appropriate”.
It is therefore being recommended that shareholders vote in favor of the proposals.
HSBC Unveiled plans in September to take the troubled lender private in a deal valuing the subsidiary at $290 billion hong kong dollars (£27.9 billion).
It already owned about 63% of Hang Seng and was proposing to pay about 106.2 Hong Kong dollars (£10.2 billion) to buy the remaining shares at 155 Hong Kong dollars a share (£14.91).
The banking giant said it would retain the Hang Seng brand and branch network after the proposed deal.
Shareholders will vote on the proposals on January 8, which if approved would see Hang Seng delisted from the Hong Kong Stock Exchange on January 27.
Hang Seng, founded in 1933, is one of the largest domestic banks in Hong Kong.
It was bought by HSBC in 1965, a landmark deal for the group at the time, but the subsidiary has struggled in recent years after seeing Hong Kong assets decline and rising bad debts.
The lender has reported a decline in profits in recent months and has increased its provisions due to tariff hikes, higher interest rates and the threat of a prolonged slowdown in the commercial property market.
HSBC is moving rapidly toward a major overhaul of the bank’s structure under the leadership of Chief Executive Georges Elhedary.
He has reorganized the bank into four new divisions and pulled out of some businesses.
It is also trying to cut business costs by US$1.5 billion (£1.1 billion) by the end of next year.