BUFFALO, N.Y. (AP) -- First Niagara Bank has agreed to sell 37 HSBC branches to KeyBank as part of its purchase of HSBC's entire upstate New York retail network, the banks announced Thursday.
Cleveland, Ohio-based KeyBank will pay First Niagara a deposit premium of about $110 million, or just under 5 percent, for the branches in Erie, Niagara, Orleans and Monroe counties.
The purchase includes all 26 of the HSBC branches that First Niagara promised to divest in a November agreement with the Justice Department to satisfy antitrust concerns.
Buffalo-based First Niagara announced over the summer that it planned to buy 195 HSBC branches in New York and Connecticut in a $1 billion deal that will give First Niagara upstate New York's biggest market share, more than 20 percent, and expand its overall presence in the Northeast. Executives said about half of the acquired branches would be sold or divested.
"We're delivering on the plan we shared when we announced the HSBC branch acquisition last year, in spite of the very challenging operating environment," First Niagara President John Koelmel said in a statement. "The outcome will be another significant and positive step toward realizing our vision for establishing a regional leadership position in the Northeast."
After the acquisition, First Niagara Bank N.A. will have more than 400 locations in New York, Pennsylvania, Connecticut and Massachusetts, $30 billion in total deposits, $38 billion in assets and more than 6,000 employees, the company said.
The all-cash purchase of the HSBC branches is expected to close early this year, followed by the sale to KeyBank by late June, the banks said.
"This transaction is an exciting opportunity to strengthen our franchise in these attractive markets and, at the same time, build long-term shareholder value," KeyCorp. Chairman and Chief Executive Beth Mooney said. The company has assets of approximately $89 billion.
KeyBank said it will offer jobs to "substantially all" of the HSBC employees at the acquired branches.
The HSBC sale is sale is part of London-based HSBC Holding's strategy, presented to investors last May, to shift focus away from retail banking to commercial and corporate banking, and to target investment in high-growth economies.
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