Citizens Bank entered into an agreement to acquire 80 East Coast branches from HSBC Bank as well as HSBC’s national online deposit business.

Under the agreement, Citizens will acquire approximately $9 billion in deposits and approximately $2.2 billion in loans for a 2% premium paid on deposits at closing. The transaction is expected to be immediately accretive to Citizens’ earnings per share and generate an internal rate of return of approximately 20%. The branch acquisition extends Citizens’ physical presence and adds approximately 800,000 new customers.

“This transaction provides us with an attractive entry into the important New York City Metro, Washington D.C. and Southeast Florida markets,” Bruce Van Saun, chairman and CEO of Citizens Bank, said. “With a sizable customer base and a solid deposit franchise, this acquisition will serve as a springboard for our consumer national expansion strategy. In addition, the $7 billion net deposit position provides us significant long-term funding flexibility in support of our attractive loan growth opportunities.”

“We are excited to welcome the HSBC employees and customers to Citizens,” Brendan Coughlin, head of consumer banking at Citizens Bank, said. “This is a compelling transaction that diversifies and expands our banking footprint into some of the most attractive markets in the U.S. It complements our existing franchise and helps advance our digital-first national expansion strategy, giving us a strong foundation to drive further growth and gain scale. We look forward to serving these new customers and showing them all that Citizens can do for them.”

The 80 branches includes 66 locations in the New York City Metro area, nine locations in the Mid-Atlantic/Washington D.C. area and five locations in Southeast Florida. The branches to be acquired will operate as HSBC branches until closing and will be re-branded as Citizens branches immediately upon closing of the transaction. This transaction is expected to close in Q1/22, subject to customary closing terms and conditions and regulatory approvals.

Morgan Stanley served as financial advisor and Debevoise & Plimpton served as legal counsel to Citizens Bank.