{"text":[[{"start":7.64,"text":"HSBC moved HK$11bn of loans off Hang Seng’s balance sheet in the first half of the year in the clearest sign yet that Europe’s largest lender is moving to clean up the Hong Kong bank it now fully controls."}],[{"start":33.76,"text":"Hang Seng sold a loan portfolio for HK$11bn ($1.4bn) to HSBC’s Asia-Pacific subsidiary on “arm’s-length terms”, according to a related-party transaction disclosure it made in August."}],[{"start":35.56,"text":"The disclosures did not specify whether the loans were “non-performing” or distressed, but in the first six months of the year Hang Seng’s “stage 3” impaired loans fell by HK$20bn ($2.6bn) to HK$37bn."}],[{"start":50.92,"text":"A significant proportion of HSBC’s bad loans in Hong Kong are concentrated in Hang Seng, making the lender appear weaker and less profitable, leading to reduced lending."}],[{"start":null,"text":"
"}],[{"start":60.84,"text":"Hang Seng’s non-performing loan ratio stood at a record 7 per cent in December 2025, above the heights of the Asian financial crisis. By the end of June this year the ratio had fallen to 4.6 per cent, indicating a rapid turnaround."}],[{"start":75.28,"text":"Its allowances for expected credit losses decreased by HK$1.6bn to HK$17.5bn even as the bank took an expected credit loss (ECL) charge of HK$2.4bn for the first half of 2026. That was about half the amount it took in the same period last year."}],[{"start":93.72,"text":"HSBC declined to comment on the deal, but executives have previously spoken about improving the capital efficiency of Hang Seng — which implies less impaired debt on its balance sheet."}],[{"start":103.64,"text":"“We have started focusing much more on how we will drive capital efficiency through balance sheet velocity,” said outgoing chief financial officer Pam Kaur on a call with analysts earlier this month."}],[{"start":115.4,"text":"“This includes how we are allocating our business across different legal entities, for example by adjusting the mix of portfolios between Hang Seng and HSBC in Hong Kong, so that everybody can participate in those growth opportunities with the right risk returns and levels of NPLs [non-performing loans], and as a result, the right degree of capital efficiency,” Kaur said."}],[{"start":134.04,"text":"Hong Kong’s real estate market struggled to recover after the pandemic, suffering several years of falling rents and rising vacancy rates. The slump hit the territory’s property developers, many of which hold loans from Hang Seng."}],[{"start":147.12,"text":"The move comes after the FT reported in July that HSBC was seeking buyers for risky Hang Seng loans following its takeover of the local bank."}],[{"start":156.48,"text":"HSBC has also taken other steps since it took full control of Hang Seng. Over the summer the bank combined many back-office executive roles between its Hong Kong organisation and Hang Seng."}],[{"start":168.56,"text":"“The privatisation of Hang Seng enables us to scale capabilities and drive growth for all our existing and new customers,” said HSBC in reference to the leadership changes."}],[{"start":179.16,"text":"“The new leaders will explore opportunities for greater collaboration and alignment in support of the differentiated propositions. We are focused on delivering the best of HSBC and Hang Seng to our customers more efficiently.”"}],[{"start":192.32,"text":"HSBC has also scrapped certain benefits for its bankers, including a subsidy to join private members’ clubs, in an attempt to harmonise benefits between staff from the London-based lender and Hang Seng employees."}],[{"start":205.76,"text":"HSBC first bought a controlling stake in Hang Seng, a local retail bank with a strong brand, during a financial crisis in 1965."}],[{"start":215.04,"text":"The deal turned Hang Seng into a dominant local participant and ranks among HSBC’s most strategically significant transactions. Last year, the London-headquartered bank said it would buy out minority investors to take Hang Seng private for $13.6bn."}],[{"start":231.44,"text":"At the time, HSBC chief executive Georges Elhedery denied that the decision was sparked by concerns over Hang Seng’s commercial property exposure."}],[{"start":240.6,"text":"Data visualisation by Haohsiang Ko in Hong Kong"}],[{"start":247.98,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1790648085_3940.mp3"}