Wednesday, May 26, 2021

HSBC selling most U.S. branches to Citizens, Cathay

HSBC Holdings is selling a majority of its U.S. branches to Citizens Financial Group in Providence, R.I., and Cathay General Bancorp in Los Angeles.

The $187.2 billion-asset Citizens agreed to buy 80 branches along the East Coast, along with HSBC's national online deposit business. Citizens said in a press release Wednesday that the deal includes $9 billion of deposits and $2.2 billion of loans. 

Citizens said it should gain about 800,000 customers from the deal, which is expected to close in the first quarter of 2022. Citizens will pick up 66 branches around New York, nine around Washington and five in southeast Florida. 

Citizens, which will pay a 2% premium for the deposits at closing, said the deal should be immediately accretive to its earnings per share. 

“With a sizable customer base and a solid deposit franchise, this acquisition will serve as a springboard for our consumer national expansion strategy,” Bruce Van Saun, Citizens’ chairman and CEO, said in the release. “The $7 billion net deposit position provides us significant long-term funding flexibility in support of our attractive loan growth opportunities.” 

HSBC said in a separate press release that it will sell 10 branches along the West Coast with about 50,000 customer relationships to the $19.2 billion-asset Cathay General. That deal will include $1 billion of deposits and $800 million of loans.

HSBC said it will retain 20 to 25 branches that will repurposed into international wealth centers. Its remaining 35 to 40 branches will be closed.

Cathay expects the acquisition to be 2% accretive to its 2022 operating earnings per share.

Morgan Stanley and Debevoise & Plimpton advised Citizens.

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