HSBC Bank USA has a much lower profile in Western New York after the sale of its upstate branches last month, but executives stress they remain committed to Western New York, and continue to employ thousands of workers in back-office and support roles.
Executives of the British-owned bank have been taking pains in recent weeks to stress that the branch sale doesn't mean HSBC is leaving the region.
"We're here in the marketplace. We're here to stay. We're here to grow the business," said Paul B. Cronin, executive vice president and commercial banking chief for upstate and the Midwest.
The bank still has between 2,000 and 3,000 employees in upstate New York, mostly in downtown Buffalo, officials said. Many of those work in jobs that support business lines or operations elsewhere.
And those are areas that executives plan to grow. Officials note that even as the bank has shed its retail, small business and credit card employees locally, and moved a compliance division to New York City and Delaware, it is still hiring for other jobs locally, including sales, relationship managers and business development.
"Buffalo will still be a great growth market for us, and we're going to have a lot of people here, because it is the back office for the rest of the business," Cronin said. "We know this is a very efficient, effective, available, and well-educated workforce here. It's proven to us. We don't need to evaluate it as an outsider. We don't know how everything pans out, but it's still going to be very important."
It may be a tall order to reassure Western New Yorkers. In less than a year, they have seen HSBC suddenly pull out of retail banking, small business lending, credit cards and mortgage lending, and cut their local employee base in half. And that's after HSBC for years stressed its determination to stay in Western New York.
But this time, executives say it's different, because their reason for being here is centered not on its banking, but on the low cost of back-office operations.
"If we were to move to anywhere new, there's a cost of change and a risk of change, and we'd have to rehire," Cronin said. "Here in Buffalo, we have a great staff, well-educated, up to the task, ready to do the job, and they're all here."
Solidifying the bank's local workforce is vital for the region.
"That is an enormous thing, and we need to do everything we can to continue that employee base here," said Andrew Rudnick, president and CEO of the Buffalo Niagara Partnership. "The one thing that we don't know is how the bank's elimination of its retail banking business affects some of its community investments. It's too early to tell."
HSBC is not getting out of the local banking market entirely. The bank won't be handling regular savings accounts anymore in Western New York, but if you're going to export anything to Southeast Asia, they want to speak to you.
Without its retail business, HSBC is shifting attention in Western New York to commercial banking customers, providing loans and other products to local companies, especially those seeking to do business internationally. That's where HSBC has touted its expertise.
"Commercial banking is the DNA of HSBC," Cronin said. "It's who we are, it's how we're wired. It's the heartland of all."
HSBC is effectively reinventing itself in Western New York, as it takes on a new role locally as more of a behind-the-scenes player on the banking scene rather than a front-line leader. The bank has long had the other business lines and operations here, but they were overshadowed by its retail bank.
That changed last month when HSBC completed the sale of 195 branches to First Niagara Financial Group for $900 million.
That deal, which closed May 18, included $14.5 billion in deposits and $2.2 billion in loans, with First Niagara keeping more than 100 branches but selling 64 locations to three other banks and closing 35 overlapping offices.
The sale took the former Marine Midland Bank — whose legacy dates back 150 years to the founding of Marine Trust Co. in 1850 — out of the consumer and small business market in upstate New York. It also separately sold its credit card business to Capital One Financial Corp., while agreeing to transfer its mortgage business to PHH Mortgage.
As a result, its once ubiquitous logo — still seen at the top of the HSBC tower in downtown Buffalo — can now hardly be found anywhere else in the region.
But HSBC retained its commercial, corporate, investment and private banking businesses nationwide, as well as its retail and small business operations elsewhere in the country, particularly New York City and Long Island. It now has commercial service centers in Buffalo, Rochester, and Syracuse, to give businesses a place to go.
And those business lines are largely supported out of Buffalo, which houses servicing and operations roles for them. In addition, Buffalo is also home to the bank's departments for customer service, information technology, legal work, documentation, compliance and back-office branch support. Officials would not break down the bank's employee base by department or business line.
Cronin himself, as head of commercial banking for upstate New York, oversees 250 front-line commercial lenders across the state, in markets where HSBC has a well-established presence. He also oversees Midwest commercial banking, where HSBC has "a number of people" handling sales and one support person in Chicago, but otherwise "the back-office all comes back to here."
Of HSBC's three U.S. hubs — Buffalo, New York and Chicago — Buffalo may be the largest, he said. "I can see us scaling down in more expensive areas, because Buffalo's certainly a more economic place," Cronin said.
That's just what the local business community wants to hear.
"The outcome of this is still very positive for the community," Rudnick said. "What they're going to continue to focus on here is exactly what's necessary for business growth and business development. That's the heart and soul of what businesses need from their financial institutions in order to grow."
>Bank's global reach
HSBC will concentrate on its core business of serving large and mid-sized companies, and wealthy families and individuals. That fits its new strategy.
In particular, it's targeting clients that can benefit from its global reach, especially in emerging markets in Latin America and Asia. HSBC operates 7,200 offices in more than 80 countries and territories worldwide, and is one of the largest banks in Mexico, Brazil, Argentina, China, Vietnam, Malaysia, India and Indonesia.
Christopher Johnston, president of the World Trade Center Buffalo Niagara, a group that promotes international trade, said HSBC's strength in Canada and position in emerging markets puts it in a good position to help local businesses that want to do more trade. But he isn't sure how well the bank's strategy would work locally, in a market with few large companies.
"We have a large number of companies that are engaged in international trade, but a lot of our companies primarily export to one country," Johnston said. "That's a great opportunity, because you have companies that are engaging in international trade, but they're not harnessing the true market. That's an area where HSBC could provide tremendous value. Time will tell whether they fill that role or not."
In upstate New York, the bank already counts many businesses among its customers, giving it a solid and profitable base to work from. But many of them do only limited exporting.
About 60 percent of HSBC's customers in upstate New York have done some international transactions. But of the 500 companies with more than $30 million in revenues, fewer than 10 percent are doing "extensive international" trade, Cronin said.
So bank executives see major opportunities. According to Brookings Institution, over the next five years, about 75 percent of firms that are not already doing business internationally will start.
"Every company I'm talking to is talking about their international markets," Cronin said.
The bank is working with various economic development agencies and business groups, and is matching its efforts to their target industries.
"We're seeing tremendous opportunity here of manufacturers keeping their businesses in Buffalo. You've got a great manufacturing base and a legacy of manufacturing that you don't have anywhere else," Cronin said. "We don't see upstate New York as a continual zero-growth scenario. The return of manufacturing is evident here.
"We're not going anywhere. We're growing our business."
HSBC Bank USA ?in Buffalo / Fewer people, more focus ?on commercial clients
Employees: were 5,000 ; ?will be 2,000-3,000
Branches: had 57; will have 0
Retail deposits: were $4.12 billion ?(without headquarters branch); will be $0
Operations: Had retail banking, small business banking, credit cards, mortgage lending, commercial banking, private banking, corporate/investment banking, back-office and administrative support;Will have commercial banking, private banking, corporate/investment banking, back-office and administrative support.
Local business focus: Was a full-service commercial and retail bank; now a commercial bank with wealth management.