HSBC, the world's second-biggest banking group, yesterday swallowed the Bank of Bermuda for US$1.3bn (£813m), in a deal that will bring it some of the most wealthy clients around the globe.
While the price HSBC is paying will not make much impact on its deep pockets, it advances the strategy of its chairman, Sir John Bond, to make wealth management one of the main planks of its business.
Buying Bank of Bermuda gives HSBC a business that administers $113bn of securities for 1,100 institutional investors.
The 114-year-old bank also has a private client business catering to about 5,000 chiefly offshore individuals and families who are thought to have an average of $4.3m invested through the bank.
Most major banks have focused on wealth management - where fees are hefty - as a potentially very lucrative area, especially as stock markets are showing signs of recovery. On Monday Barclays, Britain's third-biggest bank, announced a deal to buy Gerrard, the private client and stockbroking business, from South Africa's Old Mutual for £210m.
Bank of Bermuda said it had agreed the deal and would recommend it to investors. Its shareholders will receive $45 cash per Bank of Bermuda share in cash, comprising $40 a share from HSBC and $5 as a special dividend from the Bank of Bermuda. It will retain its board and brand and will remain headquartered in Bermuda, where HSBC will seek a listing for the new wholly-owned subsidiary on the Bermudan stock exchange.
HSBC has added a wide range of acquisitions to its group in the past year. Having acquired, Household International, the giant US consumer finance business, at the beginning of the year for $14bn, HSBC has also bought the Brazilian operations of Lloyds TSB for $815m and is currently conducting due diligence on Bethmann Bank, the private bank being sold by HVB, based in Munich.
HSBC also said this week it was looking to make an acquisition in the South Korean market as part of its quest to become the only global retail bank. Sir John Bond said: "The acquisition [of Bank of Bermuda] will significantly enhance our capabilities."Reuse content