NEW YORK -- Bank of New York Co. said Wednesday that it would buy the retail branch system of Barclays Bank of New York, effectively ending the British banking giant's foray into U.S. consumer banking.
The companies would not disclose the purchase price.
Bank of New York said it had signed a letter of intent to buy 63 retail branches and $2.2 billion in assets from the $3.2 billion-asset New York subsidiary of Barclays Bank PLC.
Bank of New York also said it would file an equity offering of eight million common shares this week. A bank spokesman said proceeds would be used in part for the Barclays purchase, though he would not specify whether the branches would be bought with cash, stock, or a combination of the two.
Several analysts said Bank of New York could pay as much as $200 million in cash for the New York-area franchise, which includes about $2.9 billion of deposits in Queens, Long Island, and suburban counties north of New York City.
Several other northeastern banking companies, including Chase Manhattan Corp., are believed to have examined the Barclays franchise.
$ 350 Million May Be Raised
John Leonard, an analyst at Salomon Brothers Inc., estimated the planned equity offering could raise about $ 350 million, $200 million of which could be used for the acquisition.
Bank of New York's stock initially plummeted on news of the offering, as investors expressed concern over dilution. Several analysts said the fears were excessive.
"The offering itself could be 6% dilutive," said David Berry, an analyst at Keefe, Bruyette & Woods Inc. But he said the purchase "is probably structured to be an earnings contributor," lessening the ultimate dilution.
Bank of New York's stock was trading Wednesday afternoon at $41.875 per share, down 75 cents. Barclays PLC changed hands at $ 30 a share, up $ 1.25, in London trading.
While the proposed transaction will end Barclays' faltering foray into U.S. branch banking - its New York bank had lost $27.6 million in the past two years - it should strengthen Bank of New York's suburban consumer franchise.
"This gives them a good branch network," said Mr. Leonard. "Barclays is quite strong in the small and middle market in suburbs and small towns outside of New York."
Closures, Job Losses Unclear
A Barclays spokeswoman would not say what would happen to two of its 65 branches that are not part of the deal.
The Bank of New York spokesman declined to say how many branches may be closed or how many of Barclays New York's 1,345 employees would retain their jobs.
Barclays's branch businesses consist mainly of consumer banking, mortgage lending, and services for middle-market and small businesses. Some of the assets being acquired by Bank of New York are expected to be nonperforming.
The acquisition, which is subject to regulatory approval, is expected to close in October, Barclays said.
Barclays was praised by some analysts for ridding itself of a deteriorating unit as it struggles worldwide to regain prowess.
The U.S. retail branch system last showed a profit in 1989, when it earned $ 19.2 million.
The New York branch system's $3.2 billion of assets is only a small part of Barclays' $20.5 billion U.S. realm, which includes wholesale operations that are not part of the Bank of New York deal.