It’s now official and unquestioned: M&T Bank Corp. is the dominant bank in Buffalo. And it’s not even close.
According to new figures just released by the Federal Deposit Insurance Corp., Buffalobased M&T held $10.2 billion in deposits in the Buffalo-Niagara Falls metropolitan area, in 59 branches, as of June 30, 2011.
That’s 38.96 percent of the total local deposits of $26.21 billion.
And it’s a 7 percent increase in deposits — and a 9.44-point rise in its market share from a year ago, when it held 29.55 percent of the market, with $9.55 billion. That’s despite having one less branch than in 2010.
“We are thrilled that, with everything going on in the industry, that a lot of customers are choosing M&T,” said M&T spokesman Chet Bridger.
Meanwhile, longtime rival HSBC Bank USA, which previously led, fell dramatically in both dollars and market share. But those losses do not reflect any mass exodus from the bank. The bank has moved some institutional and online accounts away from the Buffalo headquarters for bookkeeping purposes in preparation for the sale of its upstate branches.
Its total deposits in the market fell 58 percent to $5.14 billion, from $12.33 billion a year earlier. And its market share plunged by almost half, to 19.62 percent from 38.18 in June 2010. It also has one fewer branch, with 57 currently.
That also puts it just ahead of upstart rival First Niagara Financial Group, whose rapid growth in recent years has propelled it into a solid No. 3 role, with $4.13 billion in deposits, or 15.78 percent of the market. That’s up by a respectable 10 percent from $3.61 billion and 11.17 percent a year ago.
“We believe we’re winning in the marketplace because we have top talent serving our customers. We also believe we’re winning in the marketplace because we respond to customers’ needs and requests when it comes to improving our products,” said First Niagara spokesman David Lanzillo.
Buffalo-based M&T and the U. S. subsidiary of Londonbased global bank HSBC Holdings Plc have long dueled for the top spot in Western New York, as well as across upstate.
HSBC Bank USA, formerly Buffalo-based Marine Midland Bank until the acquisition by HSBC in 1987, has generally come out on top in recent years, but only by a slight margin, with M&T close behind.
Between them, they’ve controlled more than 70 percent of the Buffalo area market in particular, with more than 110 of the area’s 313 bank branches. All other banks trail far behind.
That changed dramatically this year with HSBC’s drop and First Niagara’s continued rise.
HSBC agreed July 31 to sell its entire upstate New York branch network, with 195 offices across the state and in southeastern Connecticut, to First Niagara Financial Group for $1 billion. The deal includes $15 billion in total deposits.
The sale is part of a global restructuring and strategy change by London-based financial giant HSBC Holdings Plc.
HSBC will still be active in commercial, corporate, private and investment banking in upstate New York but not retail banking or small-business lending.
So the drop in deposits, which occurred before the end of June, appears to be in preparation for that sale, which was already in the works at that point. That makes the decline artificial, and not a loss of customers or deposits.
The bank’s statewide deposit market share fell by less than three-quarters of a percentage point from a year ago, to 7 percent from 7.72 percent, while deposits actually increased 5 percent to $69.35 billion from $65.9 billion. And bank spokesman Neil Brazil said the bank’s “upstate customer numbers are broadly stable, including online savings.”
“Of course I appreciate there has been a sharp drop in certain areas, but if you take the state as a whole we are broadly unchanged,” he said.
Instead, he confirmed, “upstate deposit figures have reduced as the result of an internal reclassification exercise.”
Banks typically base the deposits of major corporate and institutional customers in certain “headquarters” branches around their network, particularly at their own home office. Because of the size or nationwide nature of such clients, the deposits do not need to be in a particular local branch, so big banks often centralize them.
In HSBC’s case, its main downtown Buffalo office at One HSBC Center has long been a major site for such deposits, since it originally was the bank’s corporate home.
Additionally, the bank’s HSBC Direct Internet-only banking division, with its online savings and CD accounts, were developed in Buffalo, and the downtown office has been used to house much of those deposits, even though they’re not necessarily from Western New York customers.
But the sale to First Niagara does not include the large corporate, institutional and private banking customers or their deposits, nor does it include the bank’s downstate branches in New York City and Long Island. Nor does it include the online savings division.
So HSBC has to move those funds out of Buffalo and other upstate cities — likely to New York City –before the sale.
Nationally, HSBC is 13th, with 480 offices and $98.7 billion in deposits. M&T is 17th, with 793 offices and $60.1 billion.
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