HSBC takeover to be decided in coming weeks as bidders narrow

HSBC will select its preferred bidder by the end of spring, with Hungarian bank OTP now seemingly out of the race, according to sources who spoke to Times of Malta.

The initial stage of negotiations, during which HSBC met with interested bidders, has ended, paving the way for HSBC to receive each hopeful’s final bid.

A total of six bidders are believed to have expressed their interest in taking over HSBC Malta but the field has narrowed as discussions have progressed.

After APS’s sudden withdrawal last week, Hungarian bank OTP also appears to have taken a back seat, according to sources. Although the bank has not formally withdrawn its interest, sources say it has cancelled its scheduled meeting with HSBC, suggesting that it is unlikely to proceed with a final bid.

Both APS and OTP are believed to have sensed little support for their bids from authorities. Finance Minister Clyde Caruana indicated as much last month, telling Times of Malta that Malta’s banking sector needed “more competition, not less” and that the bank’s buyer “must have a good reputation”.

Questions sent to OTP remained unanswered at the time of publication.

This would mean that the race is effectively between German fintech firm RS2 and two, as yet unnamed, non-EU banks that have also been in discussions with HSBC over the past months.

Prolonged negotiations could jeopardise stability of Maltese financial sector

A local consortium of businesses is also expected to submit its final bid in the coming weeks. However, sources say the consortium remains an outside bet, with MeetInc on Friday reporting that several of the consortium’s initial members pulled out of the bid. The pace of negotiations is expected to quicken over the coming weeks, as HSBC moves towards identifying its preferred bidder.

Last week, Caruana expressed his impatience at the deal’s glacial pace, warning that the takeover cannot “take forever” for the sake of the country’s economy.

The European Central Bank, which will have to greenlight an eventual deal, is believed to have expressed similar concerns behind the scenes.

Sources told Times of Malta that the ECB, through its membership in the European Financial Stability Board (FSB), reached out to Malta’s Central Bank, saying it was worried that the prolonged negotiations could jeopardise the stability of Malta’s financial sector. The FSB is an international body composed of senior banking and financial officials and bodies from several G20 countries.

Sources say that the Central Bank flagged the matter with HSBC Malta’s top brass who, in turn, relayed the message to its majority shareholder, HSBC Continental Europe.

The sale is now entering its ninth month, with HSBC having formally announced a strategic review of its local operations back in September 2024.

Although the bank’s fate may be marked in the coming weeks, it will be several more months before a takeover is completed.

Once a preferred bidder is selected, negotiations will enter a new phase, with advisors from both sides combing through the deal’s finer details before eventually setting pen to paper.