HSBC to Pay $10.3 Billion For Republic
By ALAN COWELL
Published: May 11, 1999
LONDON, May 10— HSBC Holdings P.L.C. announced today that it would purchase the parent company of the Republic National Bank of New York for $10.3 billion cash, the biggest foreign takeover deal for an American banking company.
The purchase of the Republic New York Corporation and an affiliate by HSBC -- an international banking group based in London with antecedents in Hong Kong and Shanghai -- would double the size of HSBC's private-banking business. It would also give HSBC the third-biggest retail branch network in the New York region, serving lower- and middle-income customers with low-cost checking and free automated teller machine services.
Banking industry analysts said the deal largely reflected HSBC's efforts to expand its highly profitable private-banking operations, which serve very wealthy clients.
''Strategically it fits,'' said James Johnson, an analyst with Credit Lyonnais Securities. ''It complements them in an area they have been pushing: wealth management.''
The deal would likely result in layoffs at Republic's New York operations to eliminate duplication with HSBC Bank USA, the network of American branches formerly known as Marine Midland. Analysts also said that the effects of the deal on Republic's less affluent customers remained unclear, with the possibility of new services and higher fees. [Page C6.]
Republic's sale would mark the end of independence for a banking business founded more than three decades ago by Edmond Safra, a Lebanese-born Jewish businessman who is regarded as an enduring figure in the banking world.
Mr. Safra, 66, suffers these days from Parkinson's disease, a neurological disorder, and there had been growing speculation in recent days that he might sell. Republic's stock rose 14 percent on Friday, and HSBC's purchase plan was reported on Sunday evening by Bloomberg News.
Under the $72-a-share agreement, HSBC is buying the Republic New York Corporation and an affiliated company, Safra Republic Holdings S.A., the parent of banks that serve clients in havens like Switzerland, Luxembourg and Monaco.
HSBC has grown aggressively out of its roots in the colonial Hongkong and Shanghai Bank. It is now a major competitor in the business of managing money for the wealthy, a profitable business that helps offset the risks in such other operations as loans to emerging-market countries of Asia.
The deal would surpass the previous record for a foreign takeover of an American bank, the $10.1 billion purchase of Bankers Trust by Deutsche Bank announced late last year. It would also be HSBC's biggest purchase since it acquired Marine Midland Bank of Britain for $6.1 billion in 1992, which led to the relocation of its headquarters from Hong Kong to London.
The combined HSBC and Republic would have assets of $554.4 billion and currently employs 136,700 people. HSBC said that it would finance the purchase partly through through borrowing and a $3 billion stock sale, and that the deal would eventually result in $300 million annual savings.
Its spokesman, Adrian Russell, said the move would maintain the bank's stated intention to balance its holdings in the industrial world with investment in emerging markets. And, he said, ''It gives us an extra million customers in the world's biggest economy.''
The acquisition requires regulatory approval in Britain, the United States, Hong Kong and elsewhere, but Mr. Russell said HSBC hoped to complete it by the end of the year.
HSBC announced last year that it would list its shares for trading in the United States, and there has since been speculation that it planned a big American acquisition.
After rising Friday on takeover speculation, Republic shares fell $1.9375, to $68.0625, in New York today. Safra Republic shares, traded in Luxembourg, soared 17.5 euros to close at 66 euros. Both HSBC Holdings and HSBC's separate class A shares fell more than 2 percent here.
By purchasing Safra Republic Holdings, HSBC will acquire 30,000 international clients in high-margin private banking, a business that generally caters to people with $1 million and more to invest. The affiliate has 44 offices holding client funds that total $56.5 billion.
''What they want to capture is an ever-growing number of millionaires in Asia and, to some extent, in Latin America,'' said Simon Samuels, a banking analyst with Salomon Smith Barney here. Wealth management, he said, was also seen as ''the flavor of the next century'' on the assumption that with governments less able to provide pensions, there would be a corresponding boom in private investment by individuals.
John Bond, HSBC's chairman, said: ''The acquisitions we have announced today will bring together two complementary private banking franchises. At the stroke of a pen, it doubles the size of our consumer-banking operations in the United States, and it doubles the size of our private-banking business around the world.''
Chart: ''At a Glance'' HSBC's acquisition of Republic New York will give it a substantially larger presence in the United States, particularly in the New York area where Republic has the third largest branch network. HSBC HOLDINGS Headquarters -- London Chief executive -- Keith R. Whitson Employees -- 144,500 1998 net income -- $4.3 billion 1998 revenue -- $43.4 billion 1998 assets -- $483 billion Return on assets -- 1.3% (1997) Largest shareholder -- Hong Kong Monetary Authority (9%)* REPUBLIC NEW YORK Headquarters -- New York Chief executive -- Dov C. Schlein Employees -- 5,800 1998 net income -- $248 million 1998 revenue -- $3.5 billion 1998 assets -- $50.4 billion Return on assets -- 0.5% (1998) Largest shareholder -- Edmond Safra (29%)* *Hong Kong figure as of September; Safra figure as of December. (Sources: Bloomberg Financial Markets, Hoover's Handbook, South China Morning Post)(pg. C6)
Edmond Safra dies in fire
December 3, 1999: 2:57 p.m. ET
Billionaire Banker killed on verge of selling his
Republic National Bank to HSBC
NEW YORK (CNNfn) - Billionaire banker Edmond Safra was
killed early Friday when fire engulfed his Monte Carlo
home, following an attack by two hooded men, according
to Monaco's official press office.
The death abruptly ended a half-century career in
which the 67-year-old Safra, the scion of a Jewish-
Lebanese banking dynasty dating back to the Ottoman
empire, parlayed his financial skills into a global
network with banks around the world.
The two attackers remained at large into the
evening local time Friday, with authorities searching
for them in the tiny principality as well as the
neighboring region in France.
In process of selling his banks
At the time of his death, Safra, who was suffering
from Parkinson's disease, was selling his controlling
stakes in both Safra Republic and Republic New York
Corp. (RNB) -- banks he founded and often referred to as
his "children" -- to Britain's HSBC Holdings for $3
billion. Last month, Safra agreed to take a $450 million
price cut in HSBC's offer, salvaging the deal after
months of delay.
Republic New York is the fifth-largest bank in the
New York in terms of deposits, with $12.4 billion, or a
4.3 percent share, in the metropolitan region.
On Thursday, the U.S. Federal Reserve said its
board of governors plans to review the transaction at a
closed-door meeting Monday. Republic shareholders
approved the deal on Nov. 30, but Federal regulatory
clearance is required before the deal can be completed.
Bank sales still on track for now
Officials with Republic New York said Friday that
Safra's death would not affect the deals, saying he had
prepared for this possibility due to his failing health.
"He was not 100 percent well, so everything has
been codified," said Melissa Krantz. "That's what
lawyers are for. Everything that was agreed-upon is
still valid; Safra had his house in order." She said the
deal is expected to close by the end of the year.
But some others sounded a more cautious note.
"There's no precedent for this kind of thing
because no other banking deals of this size had one
dominant shareholder like this," said the head of bank
credit research at an international financial
institution, requesting anonymity.
Safra owned 31 million Republic New York shares,
valued at an estimated $2.2 billion, which represented
about a 30 percent stake in the bank, as well as a 21
percent holding in Safra Republic worth roughly $1
"Everyone was appalled to learn of the news and
extends the deepest sympathy to Mrs. Safra," HSBC said
in a statement.
John Bond, HSBC Holdings' chairman, said his company
would uphold both "the tradition and integrity of
Wife and her granddaughter survive
Safra, one of the richest men in the world
according to Forbes magazine, dies without any children
of his own. The child who was in the apartment at the
time of the attack was his wife's granddaughter. Both his
wife and the child were not injured after barricading
themselves in a bathroom, but the child's nanny died in
the same room as Safra. Authorities said both suffocated
on smoke from the fire.
The blaze gutted the top floor of his turn-of-the-
century "Belle Epoque" apartment. The crime shocked the
wealthy community, which is known for its low crime and
widespread video surveillance to protect its rich and
Officials said the fire erupted at the exterior of
the building around 5:30 a.m. local time and quickly
spread to the interior. The fire was brought under
control by 8 a.m., police said.
Sources in London told CNN that Safra had received
death threats in the past. Officials said a bodyguard
who tried to fend off the assailants was suffering from
light abdominal injuries. His life is not believed to be
A trader from the age of 16
Safra was a prominent figure in international
finance beginning at age 16, when his family sent him to
set up a private trading company.
From there, he built on a tradition begun by his
ancestors, who served as gold traders and financiers
between the Ottoman hubs of Aleppo, Constantinople and
The Safra family relocated to Beirut when the
Ottoman empire collapsed after World War I. In 1953,
after anti-Jewish riots in Beirut followed the birth of
Israel, the family packed its bags again, heading to
Brazil -- where Safra remained until 1962, the year he
sold his Brazilian interests to his Brazilian brothers,
Joseph and Moise, to start his own private bank. He
subsequently moved to Geneva to start a private bank.
Safra's vast multinational business network
encompassed Republic National Bank of New York -- a unit
of Republic New York Corp., established in 1966 -- the
Luxembourg-based Safra Republic Holdings and the New
York-based First International Bank.
Unlike his private bank operations catering to the
rich, Republic New York built its business at the retail
level. With 74 branches, it is fourth in its network of
branches in the metropolitan New York region, third in
the city itself. It was one of the first banks to give
home appliances to clients bringing in new deposits of
$10,000 or more, and it is one of the few major banks in
the city not to charge non-customers for using its
automatic teller machines.
But Safra's ascent to the financial heights was
anything but smooth.
After selling his private European bank, Trade
Development Bank, to financial-services giant American
Express in 1983, a bitter dispute ensued. Safra
successfully defended himself against allegations that a
new bank he set up in Geneva was serving as a conduit
for laundered drug money. American Express was forced to
apologize to Safra in 1989 for starting a smear campaign
against him and it paid $8 million to charities of his
Safra's later decision to accept a $450 million
price cut from HSBC for Republic, made last month, came
after a major client of Republic was charged with fraud.
He also took big losses after Russia defaulted on
its overseas debt during last year's financial meltdown,
forcing Republic to overhaul its operations and lay off
Safra was also known for his philanthropic work
with community centers, universities and Yeshivas
throughout the world, as well as for his advocacy on
behalf of the environment.
Republic New York's shares opened Friday at 70-7/8,
down 9/16 from Thursday's close. It was at 70-5/8, down
13/16 in mid-afternoon trading.
Shares of HSBC closed at 845 pence, up 24, in
trading in London Friday. Back to top
--from staff and wire reports
Republic Founder Edmund Safra Found Dead
DEC 3, 1999 2:00am ET
Dec. 3, 11:00 A.M. -- Edmond J. Safra, who founded Republic Bank of New York, was found dead Thursday in his penthouse in Monte Carlo.
Billionaire Lily Safra, widow of banker Edmond Safra, is no stranger to mysterious deaths, and a new book details the curious demise of another of Safra’s four husbands.
“Gilded Lily,” by The Post’s Isabel Vincent and due out from HarperCollins on June 29, reveals suspicious details surrounding the apparent suicide of her second husband, Alfredo Monteverde, a charismatic Brazilian businessman who had troubles with depression.
Monteverde died in 1969 of two gun-shot wounds to the chest, but investigators at the time recovered only one bullet, Vincent reveals. They also found no gunpowder on Monteverde’s hands at the scene.
Vincent, who combed through Brazilian police records, discovered that despite their concerns, detectives quickly lost the two main pieces of evidence — the gun and the single bullet.
Monteverde died after returning from a lunch with Lily, where they discussed divorce proceedings and how to split time with Alfredo’s adopted son and Lily’s two sons and daughter.
SAFRA ‘KILLED’ NURSE: LAWSUIT
By Dareh Gregorian
December 4, 2002 | 5:00am
His caretaker was found guilty of the killing, but the children of Vivian Torrente say in a $100 million lawsuit that slain billionaire Edmond Safra was the one responsible for their mother’s death.
Ted Maher, 44, was convicted Monday of arson leading to both Safra’s and Torrente’s deaths on Dec. 3, 1999, when he set a blaze in the financier’s Monaco apartment in a failed bid to make himself look like a hero by “rescuing” Safra.
The action by Jason and Genevieve Torrente, however, charges that it was actually a desperate and crazed Safra who doomed their mom.
“There is very graphic evidence pointing to Mr. Safra’s culpability in Vivian Torrente’s death,” said the kids’ lawyer, Kenneth McCallion.
Maher and Torrente, 52, were both assigned to provide nursing care to the 67-year-old Safra, who suffered from Parkinson’s disease.
The Manhattan State Supreme Court suit says Safra apparently locked himself inside of his bathroom with Torrente after the fire broke out and viciously blocked her attempts to leave. During the criminal trial, Maher’s lawyer had contended that Safra was paranoid armed intruders were outside the bathroom door.
The suit says Torrente’s autopsy showed “there were ‘combat-like’ marks on [her] neck . . . and blood in her thyroid, indicating that Vivian Torrente struggled to escape the bathroom where she and Mr. Safra were located, and that Mr. Safra restrained her and prevented her escape.”
The mom “also had bruises on her knees and Mr. Safra’s DNA under her fingernails,” the suit says. Both died of asphyxiation. McCallion said the autopsy report was “inconclusive” as to whether she was asphyxiated by the smoke or by Safra putting her in a choke hold.
The suit adds that Jason, 30, and Genevieve, 23, didn’t know about the autopsy report until Maher’s trial – and accuses Safra’s widow, Lily, of conspiring with various insurance companies to keep the details of their mother’s death a secret.
It also says Torrente’s husband, Irineo Torrente, convinced the kids to sign off on a settlement agreement before they found out about the circumstances of her death.
Published reports say that deal was for $2 million, half of which the kids were supposed to split, but McCallion said the children have received only “minuscule sums. What the father got, we don’t know at this point.”
Lily Safra could not be reached for comment yesterday, but earlier this week said Maher’s conviction had cleared her husband of any wrongdoing in Torrente’s death.