A deal that would shift the management of three HSBC USA mutual funds to Wilmington Trust has hit a snag and time is running out to complete the transaction, according to a senior Wilmington official.
The companies have been in talks for several months to strike a deal under which Wilmington would take over the management and sponsorship of three HSBC products: a tax-exempt New York bond fund, a tax-exempt New York money market fund and a growth and income fund.
But Rusty Giles, who heads Wilmington's investment advisory unit, said that during a recent meeting, "things happened that we were uncomfortable with." He would not say what the sticking points in the negotiations were, but added: "The ball's in their court now."
"It may happen. It may not happen," Giles said. Time is running out on the deal because HSBC has said it will stop overseeing the three funds as of this month's last business day, he said. Wilmington needs to put a prospectus together in order for the deal to go through, he said, and each day edges the transaction uncomfortably closer to HSBC's deadline.
HSBC officials could not be reached.
HSBC had been in talks with Republic Funds to merge the products into that fund complex, Giles said, but the deal collapsed. Should the Wilmington deal survive, the three funds would be absorbed into that firm and Wilmington would pay HSBC for transaction costs and legal expenses, he said.
The two New York tax-exempt funds are an attractive prospect for Wilmington because the firm does not currently manage such products, Giles said. Now, he seems resigned to the notion that the firm won't get that chance. "Right now, I can't say one way or the other," he said.