HSBC to sell 195 US retail banking network to First Niagara for $1 billion

HSBC Holdings Plc, the London-based banking giant will sell nearly half of its US retail banking network to First Niagara Financial Group Inc, for about $1 billion in cash.

Under the deal announced yesterday, Europe's largest bank will sell 195 retail branches, primarily in Upstate New York. These branches have $15 billion in deposits and are being sold at a 6.67-per cent premium to the value of the deposits.

The London-based bank, which was one of the very few global banks to emerge unscathed from the global financial meltdown, said that the sale is part of its ongoing strategy to align its US business with its global network.

In addition to the sale of the retail branches, HSBC said that HSBC Bank USA has decided to consolidate approximately 13 branches located in Connecticut and New Jersey into nearby HSBC branches by the first quarter of 2012, subject to regulatory approval.

Under the deal, which is expected to close in early 2012, First Niagara will become the largest bank in Western New York with about 450 branches, $38 billion of assets and $30 billion of deposits.

Buffalo, New York based First Niagara will divest some branches to meet antitrust concerns and plans to issue $750 million to $800 million in common stock and $350 million to $400 million in debt prior to completing the acquisition.