HSBC to Exit Upstate NY Data Centers

Global banking giant HSBC, which once planned to build a huge data center complex in upstate New York, will instead shift the work from its Buffalo-area data centers to facilities in Chicago. Buffalo was the home base for Marine Midland, which maintained data centers in the region for decades before being was acquired by HSBC in the 1990s.

The decision to consolidate in Chicago, reported today by the Buffalo News, marks a dramatic reversal for the region. In 2007 HSBC announced plans to invest $139 millionin a new 275,000 square foot facility in a farm field in the small town of Cambria, N.Y. The decision was driven by a commitment from the New York Power Authority to allocate 11 megawatts of cheap hydro power from the Niagara Power Project as part of the financial incentive package.

The bank also planned to spend at least $1.5 billion — $100 million a year for 15 years — to maintain current technology in Amherst and Cambria.

But as HSBC's losses in subprime mortgage lending mounted, the bank announced in late 2007 that its plans for the Niagara data center project had been put on hold , citing the current overall business climate.

HSBC said this week that it will shift data center operations currently housed at facilities in Buffalo and Amherst to newer data centers in Chicago. Spokesman Wen Huang of HSBC told the Buffalo News that the bank has "developed a pair of very advanced data centers" in the Chicago area, where it also built a separate new corporate campus in the suburb of Mettawa. "We want to combine a majority of data center functionality in centralized locations," Huang said. "It’s more cost-effective and will improve operational efficiency."

The transition will be completed in 2010. HSBC has not yet said what it will do with the facility in Amherst, but said some of the staff will relocate to Chicago, and others will remain in the Buffalo area.