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National Bank lost a number of HSBC's top advisers

Acquiring a securities business is always tricky because the target's staff is the key asset. The acquirer can pay all it wants to convince the team to stay, but rivals are bound to try to steal key players away.

In the case of National Bank of Canada and its acquisition of HSBC Bank Canada's retail brokerage arm, the rivals' efforts proved to be quite successful.

"Following the announcement of the sale, but prior to its closing, a number of investment advisers left to pursue opportunities elsewhere," HSBC noted in the quarterly earnings it released on Monday. "This led to a reduction in funds under management and revenues during the fourth quarter."

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The bank disclosed that the unit's funds under management were worth $15.7-billion at the end of December, 2010, and dropped to only $10.6-billion at the end of 2011. While you probably can't attribute all of that loss to advisers taking their books elsewhere because stock market fluctuations must also be factored in, it gives you a pretty good idea of how much National lost out on.

Of course, National won't have to pay for the advisers who went elsewhere. Any transaction like this includes a clause that lowers the total purchase price if the assets (people) depreciate by the time it closes. When it was first announced, the deal was worth $206-million. HSBC didn't reveal the new price, but did announce that it will record a gain on sale of about $80-million next quarter.

HSBC's year-end results were also quite strong, recording a fourth-quarter profit of $135-million, up 14 per cent from the year prior. For the whole year, profit hit $704-million, also up 14 per cent from 2010.

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