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The big bank shift; In less than two months, First Niagara Bank will take over many of HSBC Bank's upstate branches. It will take a small army of workers -- and lots of planning -- to make the transition painless for HSBC's customers.

Frank Polino and Mary Scamacca have a big job ahead of them.

In less than two months, the bank they work for -- First Niagara Financial Group -- will complete its purchase of more than 195 HSBC Bank USA branches across the state and in southwestern Connecticut.

It's the biggest deal the Buffalo-based bank has ever done. And Polino and Scamacca are responsible for overseeing the successful completion of the deal, including converting hundreds of thousands of accounts, loans and customers to First Niagara in a single weekend in May without any hiccups that could drive away business.

But no pressure, really.

"Yes, it's our biggest transaction, but we're ready," said Polino, the bank's executive vice president of corporate initiatives and former head of operations for the four-state bank. "We're excited. We've been working on this for a while."

As the banking industry has consolidated over the past 25 years, bank mergers have become almost commonplace for most communities, but the behind-the-scenes work that goes into them is far from routine.

Large deals require months of preparation and testing, lots of meetings, countless hours and dozens or even hundreds of employees. And it still often comes down to a single weekend's work.

Many banks that have piled up deal upon deal have gained some expertise and developed standard processes over many years. But there are still many steps to complete, and many things that can go wrong. So banks try not to leave anything to chance in their pursuit of a "seamless" conversion.

"Clients just want their banking relationship to be sound and stable and easy. They don't really want to spend a whole lot of time thinking about it," said Janet Coletti, a senior vice president at M&T Bank Corp. who has worked on the integration for many of the bank's deals. "So if there are changes and associated disruptions, you're forcing the clients to worry."

The more complex the deal, the greater the risks.

"You have to make it as simple and straightforward for the customers as possible," she said.

However, this purchase is not only far bigger, but also more complicated, with a total of four transactions and six different conversions involving not only First Niagara and HSBC, but also KeyCorp, Community Bank System and Financial Institutions' Five Star Bank.

Under the deal, First Niagara is paying $1 billion to acquire 195 branches, with $15 billion in deposits and $2.8 billion in loans. The deal includes 1 million accounts and 650,000 customers.

But it's turning around and selling 64 branches, $3.8 billion in deposits and $713 million in loans to the three other banks -- including 26 branches that the U.S. Justice Department required it to divest. The rest are in areas it doesn't want. It's also closing 35 overlapping offices.

>Staggered transition

Because five different banks are involved -- each with their own systems the closings and conversions will actually occur in a staggered series of events over several months.

The primary deal, in which First Niagara buys the HSBC branches, is slated to close May 18, with those branches that it is keeping reopening the following Monday as First Niagara offices.

But those offices that are being sold to other banks will continue to be operated by HSBC until the other deals close, even though First Niagara will own them for a little while.

"For HSBC, these are four separate closings. They continue operating those branches until those sales occur," Polino said.

Key's purchase and conversion of 26 divested branches in Buffalo and another 11 in Rochester will take place over the weekend of July 13. That's followed by Community Bank, which will buy and convert 16 HSBC branches from First Niagara on July 20, and then Five Star, which is buying four HSBC branches on Aug. 17.

"Our efforts are to have no interruption of service at any time. That's what we're working for now," said Five Star spokesman Matthew T. Murtha. "It's been incredible cooperation."

But that's still not the end of it, since Five Star and Community Bank are also buying branches directly from First Niagara. Five Star will close on its four offices June 22, while Community Bank closes Sept. 7.

"The systems conversion is what drives the closing," Polino explained. "It would be hard for Five Star and Community Bank to handle two different conversions off two different systems on the same weekend."

And except for May 18, all of those dates are tentative, since they depend on prior steps.

"Anytime there's a conversion that involves two disparate systems, you're always wary," said Scott Kingsley, chief financial officer for Community Bank. "By the time they get to us, they're [either] going to be really good at it, or they're just going to be plain out of gas. We're hoping for the former."

>Contacting customers

Even before then, the banks will be busy. First, communication to customers will pick up in earnest, starting next month, when First Niagara will mail "welcome" booklets to its new customers April 10. The other banks will follow suit several weeks before their own conversions, first with introductions and then welcome packets.

"Customers should feel like they've been conversed with a lot over the next 45 days," said Scott Fisher, retail channels director at First Niagara.

The banks have spent weeks "mapping" their own products and services to those of HSBC, and the welcome packages, for consumers and business customers, will tell them about their new bank, Polino said.

In the following weeks, customers also will receive new checks, new ATM and debit cards and new credit cards, if appropriate.

"The product mapping has been pretty successful. The products and services that HSBC has match up pretty closely to what we have," said Gary Quenneville, KeyBank's Western New York district president.

>Familiar faces

It helps that First Niagara and the other banks are keeping almost all HSBC employees, Fisher said. "They should feel that the individuals in the branches that they're used to interacting with are going to be right there for them," Fisher said.

First Niagara is also working to teach those HSBC employees about what customers can expect, so they can reassure them.

The banks are also working to avoid hassles for customers, such as allowing them to keep their four-digit PIN numbers. Customers with direct deposit coming into their HSBC account will see those funds flow into their account at First Niagara or the other banks instead. And officials hope to handle the process of changing over automatic electronic debits without involving the customers.

"If things go right, the converting part is seamless and the customer doesn't notice," Kingsley said. "The harder part is proving to the customer that you're as good or better than the product suite they've been offered for the last number of years."

>Mobilizing workers

First Niagara is mobilizing its in-house staff in advance, assembling about 50 on-site teams of at least five people that will be responsible for two to three branches each that weekend, plus a centralized command center in Lockport to oversee the entire process, with 30 employees handling groups of five to six offices. It will also add staff to its call center.

"We're gearing up our team for a full-scale systems event that weekend," Polino said.

It's also calling on almost 300 "buddies" from other markets -- who went through their own conversions before -- to come to New York State to assist at the branches for a while, Polino said. "They're going to pay it forward and come back to upstate New York and the Hudson Valley," he said. "They have empathy because they just went through a conversion. They're extra hands and feet to make sure we're providing as great a service to customers as we can."

And the banks have engaged their regular vendors to help, including more than a dozen Western New York firms. In all, Polino estimated more than 1,000 people are involved.

"We're engaging a pretty sizable army to make sure that it goes well," he said. "There's a lot to do on a nonholiday weekend. It's a bit of a logistics effort."

First Niagara is even conducting mock tests in advance, to make sure it's doing it right. Scamacca, the bank's director of enterprise project management, said it already has one of its computers in each of the HSBC branches, just to test the technology connections. "HSBC employees are able to practice on it as well," she said.

>The big day

On the afternoon of May 18, the HSBC branches that are going to First Niagara will close at 3 p.m. That's when HSBC's ATM and debit cards will stop working for those customers, while credit cards will work through Sunday, May 20. By then, though, the new First Niagara cards will be active. Old checks, however, will still be accepted for at least a couple of months.

Inside each branch, HSBC will clean out the computers, remove equipment, hand over the keys and run its "de-conversion" program Friday. It will send First Niagara a computer data file the next day so First Niagara can transfer accounts to its own system by Sunday.

First Niagara also will install its computers, scanners and printers, change ATM signs and transform the branch interior. Then it will run a "dress rehearsal" with mock transactions, before opening Monday.

A similar process will take place at each of the other banks.

"I'm very confident that it'll be a pretty smooth transition," Quenneville said. "There's a lot of focus and determination on this project at a high level at Key, because we haven't done one in about six years, so we want to make sure that we do it very well. We're looking forward to getting it done."

>Experience counts

M&T and First Niagara have had plenty of experience learning how to do deals. One of the nation's 20 largest U.S.-based banks, M&T has completed 21 mergers since early 1990. Three of the purchased banks were one-third of M&T's size at the time, and one -- Baltimore-based Allfirst Financial in 2003 -- was just over half of its size. It also completed a major deal last year, when it bought Wilmington Trust Corp. in Delaware.

First Niagara itself has completed 10 bank deals in the past 14 years, including three major transactions in a row since April 2009 that expanded its presence into western Pennsylvania, eastern Pennsylvania and most recently New England with NewAlliance Bancshares.

Those deals added 57, 83 and 88 branches, respectively. And those conversions have been considered successful, even according to at least one politician who was a vocal critic before the NewAlliance deal closed.

"The conversion from NewAlliance to First Niagara occurred rather seamlessly," said New Haven Mayor John DeStefano Jr., who is a customer of the bank in that Connecticut city. "It was pretty painless."

email: jepstein@buffnews.com