On July 31, First Niagara Financial Group announced its plans to buy 195 retail branches from HSBC Bank US N.A. for a price of $1 billion cash. This left banking industry analysts wondering what the fallout would be. A few days later, a little bit more is known about the purchase, but some facts are still up in the air.
First, we know that the deposits held by the branches that are going to be purchased total $15 billion. That is a nice chunk of change for First Niagara Financial Group. Yet, even with this high profit, First Niagara does plan to shut down some of the branches. This is in order to both save money and to comply with antitrust regulations.
Even with the closures, First Niagara plans to do all it can to retain the jobs of the 1,900 HSBC bank employees at the branches it is purchasing. For those that are being sold, the goal is to have the jobs retained by the companies that buy the branches.
The entire process will take a while to complete, but estimates indicate it will be wrapped up by early 2012. Of course, that all depends on regulatory approvals, which can be a variable factor.
Even with the HSBC buyout, the bank is not planning to close its doors. In fact, the HSBC Atrium is going to be renovated so it can hold 2,000 employees, an 800 employee increase over its current numbers.
That is what analysts now know, but there are still questions. Of the 195 branches First Niagara acquires, we do not yet know how many will be sold, nor do we know who will be purchasing them. Some think it may be local banks that are looking to expand who take these branches, but time will tell.
Similarly, we do not know how many banks are going to close their doors, nor do we know when these closures will occur. If you are current HSBC bank customer, you may be wondering whether or not your favorite local branch is going to stay open, and you will have to wonder for a few more weeks or months.
This represents the fourth major acquisition in two years for First Niagara. Some analysts are wondering just how the company is going to handle this. Will the previous acquisitions make it easy for the company to bring in these new branches, or will it suddenly find it has more on its plate than it can handle?
The answers to these unknown questions are yet to come, but for those who bank with HSBC, there is comfort in knowing that the franchise is staying with a local company, one that is also based in Western New York, which should lead to job retention and a passion for helping customers through the transition. As for the unknowns, we will just have to sit back and watch what happens to these banks in the news.
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I am a retiree of what used to be Beneficial Finance, bought out by HFC then HSBC. I have life insurance coverage that was supposed to stay in effect unAtil my death that was provided by Beneficial, then HFC then HSBC until my death. I also have a $10,000 supplemental policy with HSBC that I pay for each year. I am very concerned that these coverages will remain in effect with this buyout by 1st Niagara. A reply regarding this coverage would be greatly appreciated.