HSBC to pay $10.3bn for New York bank
Tuesday 11 May 1999
The deal, which will significantly boost HSBC's American banking presence, will also result in the bank taking control of Safra Republic Holdings, the Luxembourg-registered holding company for a chain of Safra-owned private banks servicing wealthy individuals in Switzerland, Monaco, France and the Channel Islands.
HSBC is to fund the deal partly through a $3bn issue of new shares and partly through the issue of some preference shares and debt securities, and from existing resources.
The takeover is the biggest acquisition in HSBC's history, outstripping its pounds 4bn purchase of Midland Bank in 1992. It is also the largest purchase of a US bank by a foreign entity, just ahead of the $10bn purchase of Bankers Trust by Deutsche Bank. It follows HSBC's recent New York listing and will push its centre of gravity further away from its Asian roots towards the Western hemisphere.
Putting together Republic's 83-strong-branch network with Marine Midland, HSBC's US banking business with 374 branches in New York state, will create the third-largest banking network in New York State, with 2 million customers and assets of nearly $85bn.
The deal will also double the size of HSBC's private banking business.
John Bond, the chairman, said the deal would yield $300m of post-tax cost savings annually from the elimination of head and back office overlaps, after restructuring charges of $450m in 1999 and 2000.
Mr Bond said yesterday: "The acquisitions we have announced today will bring together our two complementary private banking franchises. They will also significantly enhance our position in the world's largest economy, giving us an additional 1 million customers in a mature and stable market."
HSBC shares fell 71p to 2,120p because of the capital raising and on concern that at two-and-a-half times book value the bank was overpaying.
Republic Bank of New York, the third-largest deposit taking institution in the New York city area, had been widely seen as a potential candidate for sale since September when it lost $200m on the collapse of the Russian government bond market.
Mr Safra, 66, who founded Republic from scratch in 1966, has also been suffering from Parkinson's disease, raising questions in investors' minds about how long he could continue hands-on management of a group this size. He is to stay on as honorary chairman.
Culinary experts in The Netherlands thought it was 'fresh' and 'tasty'
Of all the computers Apple has ever made there’s only one that Steve Jobs had to sell his car to finance
Actress sees off speculation about her face in an amazing way
Marvel has released first teaser trailer week early after it leaked online
- 1 As an ex prostitute, I urge all the political parties to commit to the Sex Buyer Law
- 2 Nokia no more: Microsoft drops once-ubiquitous mobile name – in favour of its Lumia brand
- 3 Renee Zellweger on plastic surgery: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
- 4 Australian café owner sparks debate after saying 'No' to having unruly children on premises
- 5 Couple die within 28 hours of each other after being married for 73 years
Renee Zellweger on plastic surgery: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
Isis releases first video showing the stoning of woman accused of committing adultery as her father shouts 'don't call me Dad'
Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
Diwali: What is the festival of lights and how is it celebrated around the world?
Nelson Bunker Hunt dead: Former world’s richest man dies in 'modest circumstances' in US after losing his fortune
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
iJobs Money & Business
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...
£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...
£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...