Bolstered by renewed investor confidence, shares of Republic New York Corp. jumped 4.8% on Friday, to $61.375, on the New York Stock Exchange.

A growing number of Republic's institutional shareholders said they now believe HSBC Holdings PLC is almost certain to push through its $10.3 billion bid for Republic despite lingering questions about the U.S. company's relationship with a money manager accused of securities fraud.

One shareholder put the probability of the deal's being scrapped at about a 1%. And most of those interviewed agreed that the deal was unlikely to be restructured. Another shareholder said that Republic told him Thursday that HSBC had indicated it "will not bow to pressure" in completing the deal.

Others said Bank of Scotland's bid for National Westminster Bank PLC would put competitive pressure on HSBC to complete the deal. Furthering the likelihood of a deal was word that an internal investigation into the matter by Republic had found that only one employee had knowledge of its trading relationship with Martin A. Armstrong. Mr. Armstrong, a New Jersey-based fund manager, has been accused of covering up as much as $1 billion in losses through Republic accounts.

Those developments led investors to bid up Republic. At Friday's close price the stock was trading at a 14.7% discount to the $72-a-share bid by HSBC, an improvement from the 20% discount to which the stock had sunk in recent weeks.

"The question now is how long will HSBC take to feel comfortable with the findings," said one Republic shareholder.

-- David Weidner

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.