HSBC has become the first British bank to pull off a major acquisition in the euro area after striking a £6.64bn agreed deal at the weekend to take over Credit Commercial de France, France's sixth-largest bank.
The bid, which came as a bolt from the blue, was unanimously agreed by the CCF board on Saturday afternoon and consolidates HSBC's position as the the world's third-biggest bank by market capitalisation after Citigroup and Morgan Stanley.
The offer, pitched at 150 euros (£90) in cash or 13 HSBC shares for each CCF share, trumps a 137.5 euro a share hostile bid from ING, the Dutch bancassurance giant. ING had been stalking the French group unsuccessfully since late last year.
HSBC may have to issue new shares to existing holders to fund the bid depending on how many CCF shareholders opted to take cash rather than HSBC stock.
There is a question mark over Charterhouse, CCF's City-based investment banking operation, which now faces the prospect of painful integration with HSBC's bigger operations. HSBC believes that the deal will yield 150 million euros of savings a year after tax.
The CCF deal comes less than a year after HSBC paid $10bn to buy Edmond Safra's Republic Bank, which has bolstered its position in private banking world-wide.
Keith Whitson, chief executive, said yesterday that CCF was a well-run and profitable bank with a high net worth customer base, strong relationships at the top end of the corporate market and a very strong position in fund management.
He said HSBC had had its eyes on CCF for some time but had not believed it was available until last December, when the rejection of ING's hostile approach created the opening for HSBC to move in.
HSBC, he added, had no current plans for further acquisitions in the euro zone area despite being linked recently with Germany's Commerzbank: "We are not averse to expanding in Europe where we can forecast adding shareholder value. But we are not planning to acquire a huge retail network in every European country."
HSBC started talking to CCF immediately after the rival bid from ING was tabled and rejected last December. Following HSBC's higher bid, ING has now accepted defeat. HSBC has received acceptances for 58 per cent of CCF shares, including stakes from ING and Kredietbank, the Belgian group, the only other likely counterbidder.
As part of the deal, HSBC intends to list its shares on the Paris Bourse. Charles de Croisset, CCF's chairman, will join HSBC's board.
The deal requires the approval of the CECEI, France's banking regulator. However, it is not thought likely that the committee - which is headed by Jean-Claude Trichet, the Bank of France governor - will oppose the deal.
Mr de Croisset said that Mr Trichet had been informed of HSBC's offer before it was approved by the CCF board on Saturday. His response had been "very professional," Mr de Croisset said.
CCF will retain its name for the time being although it is intended that it will ultimately fall into line with the group policy of branding all its outlets HSBC. HSBC's trademark hexagon symbol will be introduced earlier. Mr Whitson said: "They have had a fine name in France for a very long time. This is a bank with a great tradition and a great future. We will respect that." HSBC stressed that two-thirds of the 150 million euro savings would come from enhanced revenues rather than cost-cutting.
The group is counting on being able to tap into CCF's wealthy customer base to increase sales of HSBC wealth management products. In addition, HSBC maintains the deal will enable it to strengthen its position in the euro denominated wholesale investment banking market.
While CCF has only the eight-largest retail network in France, it is the most profitable one. The bank targets high net worth individuals and has long been seen as an attractive prey for any bank wishing to expand in France.
HSBC's cash offer represents a 14.9 per cent premium over CCF's closing price last week of 130.5 euros while the all-paper option amounts to a 22.6 per cent premium. HSBC has been advised by HSBC investment bank, and Goldman Sachs. CCF was advised by Morgan Stanley, Rothschild et Compagnie and Charterhouse.Reuse content