LONDON -- HSBC Holdings PLC announced Monday that it would purchase the parent company of Republic National Bank of New York for $10.3 billion cash, the biggest foreign takeover deal for a U.S. banking company.
The purchase of Republic New York Corp. and an affiliate by HSBC -- an international banking group based in London with antecedents in Hong Kong and Shanghai, China -- would double the size of HSBC's private-banking business. It would also give HSBC the third-biggest retail branch network in the New York City region, serving lower- and middle-income customers with low-cost checking and free automated teller machine services.Banking industry analysts said the deal largely reflected HSBC's efforts to expand its highly profitable private-banking operations, which serve very wealthy clients.
"Strategically it fits," said James Johnson, an analyst with Credit Lyonnais Securities. "It complements them in an area they have been pushing -- wealth management."
But the deal would likely result in layoffs at Republic's New York operations, to eliminate duplication with HSBC Bank USA, the network of American branches formerly known as Marine Midland. Analysts also said that the potential effects of the deal on Republic's less affluent customers remained unclear, though they could include new services and higher fees.
Republic's sale would mark the end of independence for a banking business founded more than three decades ago by Edmond Safra, a Lebanese-born Jewish businessman who is regarded as an enduring figure in the banking world.
Safra, now 66, suffers these days from Parkinson's disease, a neurological disorder, and there had been growing speculation in recent days that he might sell. Republic's stock rose 14 percent on Friday, and HSBC's purchase plan was reported on Sunday evening by Bloomberg News.
Under the $72-a-share agreement, HSBC is buying Republic New York Corp. and an affiliated company, Safra Republic Holdings SA, the parent of banks that serve clients in havens like Switzerland, Luxembourg and Monaco.
HSBC has grown aggressively out of its roots in the colonial Hong Kong and Shanghai Bank. It is now a major competitor in the business of managing money for the wealthy, a profitable business that helps offset the risks in such other operations as loans to emerging-market countries in Asia.
The deal would be HSBC's biggest purchase since it acquired Marine Midland Bank of Britain for $6.1 billion in 1992, which led to the relocation of its headquarters from Hong Kong to London.