Banque Populaire Set to Buy HSBC France Branches

PARIS (Reuters) - Banque Populaire said on Friday it was in exclusive talks to buy 400 bank branches from HSBC France, mainly in the south of the country, for 2.1 billion euros ($3.17 billion).

Credit Industriel & Commercial (CIC) and BNP (BNPP.PA) were the other participants in a final round of bidding, an industry source told Reuters.

The total assets of the regional banks were 8.38 billion euros, with shareholders' equity of 564 million at Dec. 31.

In 2007 they generated net profit of 100 million euros.

Banque Populaire said the acquisition of seven regional banks from HSBC France would improve its own network. The banks are Banque Chaix, Banque Dupuy de Parseval, Banque Marze, Banque Pelletier, Banque de Savoie, Credit Commercial du Sud-Ouest and Societe Marseillaise de Credit. They have some 425,000 private clients and 62,000 business clients.

Banque Populaire said it would keep the identities of the banks, and chairman Philippe Dupont said the buy was a "unique opportunity" for growth.

Mutual bank Banque Populaire had a 2006 net banking income of 8.1 billion euros and a net profit of 1.7 billion on assets of 20.1 billion. It employs 2,950 people.

The proposed price represents a multiple of 21 times 2007 earnings after tax.

"Banque Federale des Banques Populaires has outlined a strategy for the banks which would make it a good owner for both customers and staff, with a strong respect for the traditions of the banks," HSBC chairman Stephen Green said in a statement.

"This offer is an opportunity for HSBC to redeploy capital to other investments as we pursue our strategy and rebalance our activities toward emerging markets and faster growing business segments," he added.

He said the HSBC-branded branches in France, which are concentrated in France's major urban centers and the greater Paris area, and HSBC's Global Banking and Markets, private banking, commercial banking, asset management and insurance activities were unaffected by the offer.

HALF OF HSBC FRANCE BRANCHES

HSBC had been rumored to be selling the regional banks for some time and move is further evidence of its shift toward emerging markets.

Activist investor Knight Vinke, which is urging a strategic overhaul at HSBC, has pinpointed France alongside Britain and the United States as markets where the bank lacks scale and should consider selling up.

HSBC said in a statement the offer is an opportunity for it "to redeploy capital to other investments as we pursue our strategy and rebalance our activities toward emerging markets and faster growing business segments."

The deal represents just over half of HSBC's branches in France and stems from its purchase of CCF in 2000. The London-based bank will keep its 380 branches operating directly under the HSBC brand.

(Reporting by Marcel Michelson and Steve Slater, editing by Will Waterman)