HSBC, retrenching from the U.S., agreed to sell 195 branches, mostly in upstate New York, to emerging consolidator First Niagara for $1 billion, a 6.67% premium on the deposits, various news outlets report tonight.
Thirteen HSBC branches in Connecticut and New Jersey will be folded into neighboring ones, but the bank will keep its 116 branches in New York. HSBC’s U.S. credit card portfolio remains on the block, and 10,000 jobs may be cut; the British company is to report first-half results Monday.
But the more interesting story here may be First Niagara.
According to the FT, the buyer outbid larger rivals Keycorp and M&T for the HSBC branches. The paper quoted First Niagara CEO John Koelmel as saying it will eventually have to do a capital raise to support the larger balance sheet, although right now “the financial markets are in a bit of disarray.” The FT also raises the possibility of antitrust hurdles given how concentrated the Buffalo market is.