Canadian Western Bank and HSBC Bank Canada have signed a letter of intent for Canadian Western Bank to acquire all of the shares of HSBC Canadian Direct Insurance Inc. (Canadian Direct) for a cash payment of $25.4 million.

The deal is expected to close in four to six weeks, subject to regulatory approval.

Canadian Direct, a subsidiary of HSBC Bank Canada, offers property and casualty insurance directly to consumers in British Columbia and Alberta. Canadian Direct had $105 million of balance sheet assets at Dec. 31, 2003 and $36 million of net earned premiums for the year then ended.

The purchase price incorporates a 25% premium over book value and Canadian Western Bank expects the acquisition to be accretive to earnings in the current fiscal year.

The transition is expected to be essentially seamless, as Canadian Direct will continue to run as a stand-alone operation with no disruption to customers or employees.

Larry Pollock, president and CEO of Canadian Western Bank, said: Canadian Direct registers a very high level of customer satisfaction and its people are of exceptional quality, making it an ideal fit with our Think Western brand and culture. We believe the potential for this company is excellent and we are very pleased to be adding another dimension to our financial services. Most notably, we anticipate that the addition of Canadian Direct will contribute substantially to the Bank’s revenues, with other income expected to increase by more than 50%.”