HSBC Faces Near-Term Buyback Constraints

17 days ago

Chloe Malay

"What about the investor reaction though? Yeah, they're actually are down quite a bit this morning after announcing plans to privatize Hangang Bank, which is one of its Hong Kong subsidiaries that has been in quite a troubled spot lately. So, HSBC owns about 63% of that bank and it will spend around $14 billion buying the shares it doesn't already hold. The problem that investors seem to have with this is that to keep its capital ratio within range, HSBC said it will have to refrain from buybacks for the next three quarters. So investors tend to want those buybacks, which explains the shares being down this morning."

The commentary highlights that HSBC's plan to privatize its troubled Hong Kong subsidiary and the subsequent pause on share buybacks for three quarters has weighed on investor sentiment, causing the shares to drop. This reflects concerns over near-term shareholder returns despite the strategic long-term growth investment in Hong Kong.

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