HSBC Bank USA's widely reported attempt to charge into New England by purchasing about 300 Fleet Bank branches was much ado about nothing, bank representatives said Wednesday.
HSBC never bid on the Fleet branches, according to bank spokeswoman Linda Stryker. The group's top executives, including HSBC Bank USA CEO Malcolm Burnett, decided to pass on the Fleet deal.
"We made a decision in mid-August not to pursue the Fleet opportunity," Ms. Stryker said. "Looking at all the issues that HSBC had to deal with at that time, we just decided we did not want to spread ourselves too thin."
HSBC is already acquiring Republic New York Corp. and Safra Republic Holdings, which have assets of $51 billion, for $10.3 billion cash.
The U.S. arm of London-based HSBC Holdings plc was rumored to be a finalist for the Fleet branches. Last month, American Banker, a widely read trade publication, pegged HSBC as the leading candidate among four final bidders in the Fleet sale.
Bank regulators are requiring Fleet to sell the branches -- 204 in Massachusetts, 50 in Rhode Island, 39 in Connecticut and 15 in New Hampshire -- as part of its merger with BankBoston Corp. The sale is required to reduce the merged institution's control of market share and foster adequate competition in those states.
Fleet announced Tuesday that Sovereign Bancorp. Inc. of Philadelphia will acquire 278 branches for about $1.4 billion.
A strong bid by HSBC would have represented a significant move by the Buffalo-based bank to expand its franchise. Making a large franchise addition often equates to job growth at the bank headquarters.
The bank did consider the opportunity to move into the New England market, but decided not to pursue this deal, Ms. Stryker said.
HSBC is still attempting to close the Republic deal, which has been delayed because of a regulatory investigation.
Japanese regulators are investigating a Tokyo branch of Republic New York Securities for allegedly inflating asset values in a fund marketed to Japanese investors.
Republic New York Corp. has conducted its own investigation and suspended the chief executive of its securities division.
The investigation threw a monkey wrench into the initial scheduled closing date for the merger of Oct. 1. The investigation could derail the merger, but that is not likely.
"HSBC continues to work with Republic towards closing of the merger in accordance with the agreement. As a result of this investigation, it may take longer than originally anticipated to complete the regulatory process," the bank said in a written statement.