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First Niagara's plan to pay for nearly 200 HSBC branches has diminished the deal's promise, put new burdens on the bank and its investors and lowered CEO John Koelmel's profile on Wall Street.
December 7 -
The Justice Department on Thursday ordered First Niagara Financial Group to sell 26 of the branches it has agreed to buy from HSBC Holdings. The branches are in the Buffalo area and have $1.6 billion of deposits.
November 10 -
First Niagara Financial is expected to divest roughly a quarter of the 195 branches it's buying from HSBC. Industry observers have identified at least five community banks that may make bids.
September 1
The $30 billion-asset company said that rival KeyCorp. is buying all 26 HSBC branches in Erie, Niagara and Orleans counties that the Justice Department has ordered it to divest, plus 11 other branches in the Rochester area, for a total $110 million. The deal includes $2.4 billion of deposits and roughly $400 million of performing, mostly residential real estate loans.
The deal, expected to close next quarter, would move First Niagara a step closer to completing its acquisition of HSBC's 195-branch network in upstate New York in Connecticut. Even with the divestitures and the expected sale of many more overlapping branches, that $1 billion deal announced in July would roughly double First Niagara's branch network in upstate New York and give it the No. 1 deposit share in the region.
"The outcome will be another significant and positive step toward realizing our vision for establishing a regional leadership position in the northeast," First Niagara president and chief executive officer John R. Koelmel said in a news release."
For the $89 billion-asset Key, the acquisition would significantly strengthen its position in greater Buffalo, where it has the No. 4 deposit share, and Rochester, where it ranks 7th.
"This transaction is an exciting opportunity to strengthen our franchise in these attractive markets and, at the same time, build long-term shareholder value," KeyCorp chairman and CEO Beth Mooney, said in a news release.
Key, based in Cleveland, said it expects to retain substantially all of the employees at the branches it is acquiring.
