LONDON (CNNfn) - Global banking giant HSBC Holdings announced plans Monday to boost its U.S. and European presence by acquiring Republic New York Corp. and its sister European unit in a deal valued at $10.3 billion.
If approved, the deal would top, in valuation terms, Deutsche Bank's planned $10.1 billion buyout of U.S.-based Bankers Trust (BT), which recently received a green light from New York regulators, removing a major hurdle to the deal.
HSBC will pay $72 for each share in both Republic New York and Republic's 49-percent-owned European banking subsidiary, Safra Republic Holdings.
Under the deal's terms, the 51 percent interest in SRH that is not held by Republic will be valued at $2.6 billion.
HSBC shares in Hong Kong had fallen 4.3 percent to HK$270 Monday, before they were suspended on expectation of a takeover announcement. The company's London-listed shares (HSBA) slipped 0.5 percent, to 2,180 pence, when London began trading Monday.
The deal would add to HSBC's existing U.S. business, HSBC Bank USA, through its target's main unit, Republic National Bank. However, the main lure is Republic's international presence in private banking, according to published reports.
One million extra customers
HSBC said it expects cost savings of $300 million within two years and an additional one million customers that will double its bank business.
The bank plans to fund the deal with a $3 billion placement of HSBC ordinary shares, the issue of preference shares, a tier-2 debt issue and the bank's own resources.
The company said the purchase has been approved by the boards of both banks.
Republic (RNB) shares jumped 14 percent to $70 Friday in New York on expectation of a bid by HSBC, which has been seeking acquisitions as a means of using its cash pile of over $10 billion.
New York-based Republic has restructured its operations since making heavy losses in emerging markets last year, but has built an international presence in private banking and asset management.
The bank was founded by the Lebanese financier Edmond Safra, who retains a 30 percent stake, and holds a 49 percent stake in Safra Republic Holdings, its Luxembourg-based private banking affiliate.
The high margins in the fast-growing private banking business had also seen Republic linked in recent weeks with Swiss banking giant UBS, the global leader in private banking assets under management.