By ALLISSA KLINE
akline@bizjournals.com | 716-541-1612

Buffalo's First Niagara Financial Group Inc. announced it will seek to raise $450 million in a common-stock sale that marks the first of three possible capital-raising initiatives the bank may pursue as part of its planned $1 billion acquisition of 195 HSBC Bank USA N.A. branches in New York state.

The parent of First Niagara Bank said Dec. 6 that it may commence two separate offerings in the future, based on market conditions: the sale of perpetual non-cumulative preferred stock to raise $350 million in aggregate liquidation; and the sale of subordinated notes to raise $300 million in aggregate principal.

It also announced plans to reduce the quarterly cash dividend on its common stock from 16 cents per share to 8 cents per share, starting in first quarter 2012 - a move the bank said will preserve approximately $110 million of First Niagara's capital in 2012.

First Niagara announced July 31 that it would seek to raise $750 million to $800 million as part of the acquisition. But the current state of the marketplace, plus the decreasing value of the bank's stock, meant it had to consider additional instruments beyond the common-stock offering to raise money.

Goldman Sachs & Co. will serve as global coordinator for the current offering, the bank said. Goldman Sachs, Sandler O'Neill + Partners LP, Bank of America Merrill Lynch and Keefe, Bruyette & Woods Inc. will serve as joint book-running managers.

Last month, First Niagara announced it must sell 26 of the 195 HSBC Bank branches it plans to acquire as part of the pending deal. The sale of those ranches, which represent $1.6 billion in deposits, is necessary to comply with U.S. Department of Justice antitrust laws. The branches are located in Erie, Niagara and Orleans counties.

Additionally, the bank plans to sell or lease other branches that don't fit into its desired footprint. That may include branches located outside the Interstate-90/Interstate-87 corridors. The exact branches to be sold or leased may be announced before the end of the year, bank officials have said.