HSBC, through its wholly owned subsidiary HSBC Bank USA, and other wholly owned affiliates, has reached an agreement to sell 195 retail branches, primarily in Upstate New York, to First Niagara Bank, for $1bn.
The deposit premium to be paid by First Niagara of 6.67% of the acquired deposits, totals approximately $1bn, based upon 31 May 2011 balances.
As at 31 May 2011, the branches held approximately $15bn in deposits, $15bn in gross assets including $2.8bn in loans, and held $4.3bn in assets under management.
Upon completion of the transaction, First Niagara expects to have approximately $38bn in assets, $30bn in deposits and 450 branches across Upstate New York, Connecticut, Massachusetts and Pennsylvania.
As part of its ongoing US strategic focus on commercial and corporate banking, HSBC Bank USA remains committed to serving and further developing corporate banking relationships in Upstate New York.
In particular, the bank will continue to provide a full suite of international commercial banking offerings, including trade and cash management products and services through its four business centres in the region.
HSBC Bank USA retail branches involved in the transaction will remain open for business throughout the transition and will continue to offer all products and services to customers.
The all-cash transaction is expected to close in early 2012, subject to regulatory approvals and other customary closing conditions.
HSBC North America group managing director and CEO Niall Booker said this transaction is part of the strategy outlined in our May 2011 Investor Day presentation to align its US business with the global network and meet the local and international needs of domestic and overseas clients.
In addition to the sale of the retail branches to First Niagara, HSBC Bank USA has decided to consolidate approximately 13 branches located in Connecticut and New Jersey into nearby HSBC branches by the first quarter of 2012, subject to regulatory approval.
The acquisition includes HSBC’ 183 branches in New York’s Upstate region, four branches in northern Westchester County, New York, two branches in Putnam County, New York, and six branches in Connecticut.