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.
- 1 Liam Gallagher brands Kanye West 'utter s**t' during BRIT Awards performance
- 2 Isis burns thousands of books and rare manuscripts from Mosul's libraries
- 3 People who sleep more than eight hours are more likely to have a stroke, research shows
- 5 Muslim women's rights campaigner writes heartfelt letter to girls thinking of joining Isis
Ukraine crisis: Putin will cut gas to Europe unless Russia is paid by the end of the week
Liam Gallagher brands Kanye West 'utter s**t' during BRIT Awards performance
Isis burns thousands of books and rare manuscripts from Mosul's libraries
Missing Mexico teachers: Protests organised by union quashed in violent police crackdown
Mohammed Emwazi: Nine things we now know about man named as Isis militant 'Jihadi John'
Oscars 2015: Birdman beats Boyhood as Eddie Redmayne and Patricia Arquette win big - as it happened
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
iJobs Money & Business
£17000 - £25000 per annum: Recruitment Genius: An opportunity to join this new...
£18000 - £21000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£36000 - £44000 per annum: Recruitment Genius: Encouraging more businesses to ...