Lending giant HSBC, in a major move away from retail banking, is selling 195 branches to an upstate upstart.
The $1 billion deal with Buffalo-based First Niagara Financial Group comes after the London-based banking conglomerate announced $11.5 billion in first half profits. But the bank is still unwinding losses from the subprime crash and is leery about stagnant growth in the U.S. and an uncertain regulatory future, according to industry experts.
The branches are mostly in upstate New York, though four are in Westchester, two in Putnam and another six in southern Connecticut. No HSBC branches in the five boroughs are involved in the deal.
"Given the possible losses from the HSBC divestment in New York, this is the best possible outcome for HSBC's employees and branches across the state," Gov. Andrew Cuomo said in a news release. "In addition, this purchase is good news for New York because First Niagara is a New York company that has a record of growth and creating jobs in upstate New York."
The sale of the New York branches is a sign of CEO Stuart Gulliver's determination to get rid of businesses not considered core to the bank's future, according to the UK's Telegraph. The lender recently sold its Russian business and further sales of international retail banking businesses are expected. HSBC has also slashed 5,000 jobs and plans to lay off another 25,000 by 2013.