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First Niagara to sell 37 HSBC branches to KeyCorp
January 12, 2012 / 1:55 PM / 6 years ago

First Niagara to sell 37 HSBC branches to KeyCorp

(Reuters) - First Niagara Financial Group Inc FNFG.O will sell 37 HSBC Holdings Plc (HSBA.L) locations that it bought last year, along with $2.4 billion in deposits, to KeyCorp (KEY.N) for $110 million to clear antitrust hurdles.

A view shows the entrance to a HSBC Bank branch in New York August 1, 2011. REUTERS/Shannon Stapleton

The divesture includes the 26 branches that First Niagara had agreed to sell in the Buffalo, New York area in order to gain approval from the U.S. Justice Department for its purchase of 195 branches in HSBC’s U.S. network.

“We’re delivering on the plan we shared when we announced the HSBC-branch acquisition last year, in spite of the very challenging operating environment,” First Niagara Chief Executive John Koelmel said in a statement.

In July, HSBC had shed nearly half of its underperforming U.S. branch network, selling the branches to First Niagara for about $1 billion.

KeyCorp had been one of the bidders for the HSBC branches along with M&T Bank Corp (MTB.N).

“When we started looking at the HSBC acquisition, we immediately started a parallel path on what we would divest,” First Niagara Chief Financial Officer Greg Norwood had told Reuters in an interview in August.

As part of the divesture, employees of the branches to be sold will move to KeyCorp.

The acquisition makes Buffalo, New York-based First Niagara one of the largest regional banks in the New York region.

First Niagara has a history of growth through acquisitions, with nearly one such transaction a year for the last decade.

Shares of First Niagara were up 2 percent at $9.50 in early trade on Thursday on the Nasdaq. Shares of KeyCorp were up 1 percent at $8.26 on the New York Stock Exchange.

Reporting by Tanya Agrawal in Bangalore; Editing by Maju Samuel

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