HSBC Holdings said it could divest as many as 20 branches in New York City as part of its $10.3 billion acquisition of Republic New York Corp.

The deal, announced Monday, would create a bank with 8.23% of deposits in New York State - the third largest share, behind those of Chase Manhattan Corp. and Citigroup Inc. - and a formidable force in private banking.

Republic, with $50.4 billion of assets, is to be folded in to HSBC Americas, a $33.8 billion-asset Buffalo subsidiary of the London banking company.

Much of the two banks' overlap would come in New York City. HSBC has 53 branches there and a 2.4% market share. Republic has 65 branches in the city and a 4.6% market share, according to Sheshunoff Information Services.

Overlap is less significant elsewhere in the state. In total, HSBC has 374 branches in New York, $21 billion of deposits, and a 5% market share, according to Sheshunoff.

Republic has 83 branches in the state, $13.6 billion of deposits, and a 3.21% market share, according to Sheshunoff.

Some New York community groups reacted swiftly to news of the deal. Republic is one of the few remaining banks in the region that charge no fee for withdrawals from their automated teller machines. HSBC imposes a $1.50 surcharge on noncustomers.

It was unclear how the new company would approach the surcharging issue. "It is something we will keep track of," said Glenn Von Nostitz, research director for Mark Green, New York's public advocate.

Analysts said they see significant opportunities to cut costs. "They are taking a hatchet" to the back office, said Marni Pont O'Doherty, an analyst at Keefe, Bruyette & Woods Inc.

Any cuts would be in addition to $67 million in annual savings Republic has said it will slice over two years in a restructuring announced in March.

As part of the restructuring, Republic signed a 10-year back-office outsourcing arrangement with Computer Sciences Corp., an El Segundo, Calif., data processing specialist. A spokesman for CSC said preliminary indications are that the agreement would remain in place.

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