LONDON -- HSBC Holdings PLC said Friday that its stake in Midland Bank PLC had risen to 73.9%, and that it plans to immediate capital infusion.
HSBC, the London-based parent of Hongkong and Shanghai Banking Corp., declared its friendly $7 billion takeover bid a success last Thursday when its holdings reached 63.58%.
The total now includes 54.8% of Midland's stock that was tendered in response to the bid, plus 19.08% that had been acquired by HSBC, its affiliates, and parties deemed to be acting in concert with HSBC.
The tender offer will remain open for an unspecified period, though the cash portion of the bid is scheduled to close on July 9.
HSBC chairman William Purves called Midland "a well-capitalized bank" that has "no immediate requirement" for more funding.
"As we reorganize, the main treasury operations in the more important centers like London, New York, and Tokyo ... will be [combined with] the Midland Bank," said Mr. Purves. "That will increase the balance sheet. If there's a need for capital that will be addressed when we come to it."
|Second Wind' in the Race
HSBC is cash rich and last April it revealed inner reserves equivalent to $3.26 billion. "Midland will have to justify to the holding company any request for capital in the same way as other subsidiaries do," Mr. Purves said.
Under HSBC, Midland could become more aggressive in the British and continental European market. "Like a long-distance runner, they've got a second wind," said Mr. Purves.
Hongkong Bank had tried to gain a foothold in Europe for more than a decade and had to beat off a bidding challenge from British rival Lloyds Bank. The combined entity will have some $275 billion in assets.
Hongkong Bank's attempt to buy Royal Bank of Scotland failed in 1981 when the Monopolies and Mergers Commission blocked the deal. Six years later it took a 14.9% stake in Midland in what was seen as a prelude to the takeover.
Mr. Purves said he hoped that by yearend HSBC would gain 100% control of Midland, which has suffered from heavy loan losses in recent years.
Mr. Purves said Lloyds gave HSBC an assist in its bid for Midland, and not only because Lloyds withdrew its counterproposal.