KeyBank N.A, a wing of
), looks to be on time for its closure of the acquisition of 37
HSBC units from
First Niagara Financial Group Inc.
). The deal is anticipated to close on July 13, 2012.
Earlier in January, KeyBank N.A had signed a deal with First
Niagara to purchase 37 HSBC branches - 26 in Buffalo and 11 in
Rochester - by paying 4.6% or $110 million premium on deposits of
nearly $2.4 billion. Upon acquisition, KeyCorp would also undertake
$400 million in loans. This will expand the company's presence in
the region by bringing the number of KeyBank branches to 99.
First Niagara had acquired 195 branches from
HSBC Holdings plc
) for $1 billion in cash. First Niagara decided to divest some of
the branches to satisfy antitrust concerns raised by the Department
of Justice and for non-alignment of these branches to its growth
Community Bank System Inc.
) and Five Star Bank -- a subsidiary of
Financial Institutions Inc.
) are the other banks to buy a few HSBC branches from First
The officials at KeyCorp have been preparing to overcome the
deal's biggest hurdle: smooth consumer conversion. The conversion
is set for the weekend, following the closure date. The company's
branch and call center staff will help the customers to clear
anticipated confusion stemming from this complicated deal. This
facility will be provided for the next couple of weeks as well.
Further, the bank plans to extend working hours on Tuesdays,
Thursdays and Saturdays to assist customers' queries. KeyCorp has
already mailed information to the HSBC customers regarding their
accounts and conversion in the form of 'welcome kits.' The bank has
been working with HSBC for ensuring a fault-free conversion process
to minimize customers' troubles.
The smooth and timely completion of the deal is sure to enhance
KeyCorp's image. The acquisition would enable the company to expand
its footprint in the upscale New York region. Further, this would
help it to build a sound consumer base, benefiting its wealth
management as well as banking business in this region.
Moreover, retention of HSBC employees would positively affect
KeyCorp in the long run. This will not only guarantee a smooth
customer conversion process, but also will enhance KeyCorp's human
resources as well as goodwill. Upon acquisition, KeyCorp will get
its first ATMs that accept check deposits by simply scanning the
image of the check.
Shares of KeyCorp currently carry a Zacks #3 Rank, which
translates into a short-term Hold rating. Considering the
fundamentals, we are also maintaining a long-term Neutral
recommendation on the shares.
COMMNTY BK SYS (CBU): Free Stock Analysis
FINANCIAL INST (FISI): Free Stock Analysis
FIRST NIAGARA (FNFG): Free Stock Analysis
HSBC HOLDINGS (HBC): Free Stock Analysis Report
KEYCORP NEW (KEY): Free Stock Analysis Report
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