Youssef Nasr has arrived.

After years on the front lines at the former Marine Midland and then almost a decade at HSBC Canada in Vancouver, the courtly and owlish Mr. Nasr now has a 10th-floor berth on Manhattan's Fifth Avenue.

Not that he has much time to enjoy the view.

As president and chief executive officer of HSBC USA, Mr. Nasr, 45, is grappling with the internal strife that typically follows a large acquisition - in this case, the $9.85 billion purchase of Republic New York Corp. - and the external battle against Citigroup Inc., Chase Manhattan Corp., FleetBoston Financial Corp., and other competitors.

Mr. Nasr, like the late Edmond Safra, the former majority owner of Republic, hails from Beirut. He brings an almost philosophical sensibility to the challenges of melding two organizations.

"Cultural clashes are the big issue," Mr. Nasr said. "Here we had two successful businesses, two proud organizations. The tough part is choosing and keeping the best people and systems."

Three months after the merger, all seems to be going smoothly.

Analysts say that $500 million in expense cuts, which were called for when the deal was announced last May and are due by yearend, will not be a particularly demanding goal.

"Most of it is very standard plumbing," said Christopher Ellerton of Warburg Dillon Read.

Though the tight labor market and strong economy in the United States have helped siphon off much of the staff that HSBC would have had to cut, the company has lost only six high-level executives, said Fox-Pitt Kelton analyst Mark Thomas. "As far as we're concerned, the integration is going fine," Mr. Thomas said.

Mr. Nasr said there has been no perceptible reduction in deposits, funds under management, revenues, loans, number of accounts, or small-business customers.

With the scandal at Republic New York Securities Corp.'s office in Philadelphia safely behind it - allegations of customer fraud almost killed the merger - "nothing has come up that's outside our radar screen," Mr. Nasr said. "Everything is a go."

Good thing. The New York banking market, in the city and upstate, is sizzling.The real threat comes from Citi and Chase, which can offer middle-market commercial customers in New York the same global reach and breadth of products that HSBC can.

Mr. Nasr concedes that in many ways banking has become a commodity business. "There are very few original strategies," he said. Like many banks in competitive regional markets, his goal is to bring a "relationship" orientation to HSBC USA, which has $90 billion of assets and ranks third in deposit market share in both the city and state of New York.

Because anyone can perform a transaction, he said, the trick is to provide "quality service and consistency of execution." It's the ability to "deliver the hundred little things that make the execution possible" that will make HSBC stand out, he said.

What HSBC USA does have, courtesy of its deal with Republic, is the benefit of an exceptionally strong private banking and asset management arm, led by senior executive vice president Leslie E. Bains.

Ms. Bains has more than 30 years' experience in the private banking business - mostly at Citi, Chase, and the former Manufacturers Hanover Corp. Her mission is to capitalize on the boom in new-money millionaires while expanding the customer base that buys mutual funds, brokerage products, and insurance from HSBC.

In the former Republic's private bank, the average customer had $5 million of investable assets. At HSBC a new model puts this sort of private banking client at the top of the pyramid.

Below them are the merely affluent ($500,000 or more in investable assets), followed by a "Premier" level of people with only $75,000 in combined deposits and investments at the bank.

The base of the pyramid is the retail market, in which anyone with $1,000 to invest can buy an HSBC country- or industry-specific mutual fund.

The Premier clients do not get to work with private bankers, but they can meet with "relationship managers" - somewhat glorified financial planners with a product sales bent.

Customers with more than $1 million under management by the bank can view their account balances online and deal with their private banker via e-mail. The ability to transfer between accounts and perform online trading should be available to this group in the next 12 to 18 months, Ms. Bains said.

Ms. Bains also plans to raise the company's profile among high-net-worth Asians and Asian-Americans living and working in the United States - building on HSBC's long history of relationships with top companies and wealthy individuals in Hong Kong, Singapore, China, and the rest of Asia.

To that end, HSBC USA last week sponsored a "Treasures of Ancient Beijing" show at Christie's auction house, inviting more than 300 of its private banking and Asian commercial clients.

There are also the less-pleasant aspects of the merger to address. The combined companies' staff of 13,900 will be cut by another 1,000 this year, Mr. Nasr said, and 21 of its 463 branches in New York state are slated to close.

Employee morale "is generally good, given what's going on," Mr. Nasr says.

Computer systems are to be integrated between May and September.

Insiders point out that before it bought Republic, HSBC's U.S. branch was the old Marine Midland Bank, purchased in 1988.

Marine was known for cost cutting - and for being a stodgy upstate bank that dragged its feet on computer technology, including the Internet. Republic, meanwhile, had a slicker, more cosmopolitan style.

Salary differences between the two banks were about 40%, according to a former Republic employee, who left for a dot-com company after the merger closed. Marine Midland had "this 'save money' mentality," he said. People there were "so fearful of spending an extra dollar."

HSBC is also extremely committee-oriented, with no personality behind it, this ex-employee added. "Everything is consensus-driven, which is not the way to get somewhere fast - especially in Internet time.

Though HSBC has "a really good team in Buffalo, they only recently got e-mail and Internet access," he said. "They are really, really playing the game at a disadvantage."

There's also a branding hurdle. New York customers are familiar with the Marine Midland and Republic names, but the collection of initials that make up HSBC is not so easily digested. Though the parent company put the corporate moniker on all its U.S. branches a year ago, people are still struggling with its identity.

Fortunately, Mr. Nasr has consulting help from James H. Cleave, who headed Marine Midland until 1997 and now serves as chairman of HSBC Canada. Mr. Cleave and Mr. Nasr were colleagues when Mr. Nasr was HSBC Canada's president and CEO, and they are working together closely on the Republic integration.

"Jim is probably the most experienced group executive in putting together mergers," Mr. Nasr said. "He's probably done about half a dozen of significant size."

The head office in London certainly has high expectations of its U.S. subsidiary. Though HSBC USA contributed just 12% of the parent company's $5.4 billion in profits last year, that figure is expected to climb to 19% in 2000, Mr. Nasr said.

The U.S. operation is $569 billion-asset HSBC's third-largest business, after Asia and the United Kingdom, but analysts say that's where much its future firepower lies.

"Hong Kong is moribund," said Mr. Ellerton, the Warburg Dillon Read analyst. "The rest of Asia is still recovering from the Asian shock. The U.K. is in the low double digits. A lot of the current growth in HSBC is from investment banking, wealth management, and the consolidation benefits coming from the U.S."

For Mr. Nasr, the integration also represents a key test after one of the steepest steps in his career climb. The son of a Mid-East Airline executive, he left Lebanon in 1972 for England to attend Cambridge University. He joined Marine Midland's international staff in 1976 and has been with the bank and its successor company ever since.

Running HSBC's U.S. operation is a much bigger and more important job than his Canada post. He has pledged to proceed cautiously, focusing on the Republic integration and shunning such diversions as deal-making.

"Right now we're not even looking," he said. HSBC won't consider another U.S. acquisition until yearend at the earliest, he said, assuming stock prices don't come down precipitously. If acquisitions suddenly become very cheap, then HSBC would think about accelerating its deal schedule, he said.

When the time does come, purchases would probably be made in or near New York, Pennsylvania, California, or Florida, where HSBC already has branches. "We don't think bricks and mortar are a bad way to grow," Mr. Nasr said.

The company might also consider deals related to insurance, brokerage, asset management, or the Internet, he said, as long as the numbers make sense.

Until then, Mr. Nasr is focused on integrating the two companies and generating internal growth. With his wife and two teenage sons still in Vancouver until the end of the school year, Mr. Nasr has plenty of time to wine and dine important clients, a pastime he seems to relish.

"Mr. Nasr is always out visiting clients, be they small-business, middle-market, or private-banking clients," Ms. Bains said. "Every day his day is filled with meeting clients. That permeates the organization. And that's HSBC's differentiating factor" in the United States.


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