Photo by James Sanna | Commercial Record staff
Providence-based Citizens Bank will expand its East Coast footprint by acquiring 80 branches from HSBC Bank, which plans to exit U.S. retail banking.
Citizens Bank said in a statement that it will also acquire HSBC’s online U.S. deposit accounts. The deal for the branches and online accounts will give Citizens an additional $9 billion in deposits and $2.2 billion in loans, the statement said. The branch acquisition extends Citizens’ physical presence to several markets and adds approximately 800,000 new customers.
“This transaction provides us with an attractive entry into the important New York City Metro, Washington D.C. and Southeast Florida markets,” Chairman and CEO Bruce Van Saun said in the statement. “With a sizable customer base and a solid deposit franchise, this acquisition will serve as a springboard for our consumer national expansion strategy. In addition, the $7 billion net deposit position provides us significant long-term funding flexibility in support of our attractive loan growth opportunities.”
This transaction is expected to close in the first quarter of 2022, subject to customary closing conditions and regulatory approvals. Citizens said the transaction is expected to immediately increase its earnings per share and generate an internal rate of return of approximately 20 percent.
“We are excited to welcome the HSBC employees and customers to Citizens,” Brendan Coughlin, Citizens head of consumer banking, said in the statement. “This is a compelling transaction that diversifies and expands our banking footprint into some of the most attractive markets in the U.S. It complements our existing franchise and helps advance our digital-first national expansion strategy, giving us a strong foundation to drive further growth and gain scale. We look forward to serving these new customers and showing them all that Citizens can do for them.”
HSBC currently has 148 U.S. branches. The 80 branches Citizens will purchase include 66 locations in the New York City Metro area, nine locations in the Mid-Atlantic and Washington area, and 5 locations in Southeast Florida.
HSBC had closed its remaining three Connecticut branches in Fairfield County last year as part of a nationwide branch consolidation. Most of Connecticut’s HSBC branches had been acquired by First Niagara Bank in 2012 before KeyBank acquired First Niagara in 2016.
HSBC said in a separate statement that it would sell 10 other branches to California-based Cathay Bank, repurpose 20 to 25 branches as wealth centers to serve about 300,000 international customers and then wind down operations at the remaining locations.
