Last August, M&T Bank Corp. (MTB) and Hudson City Bancorp Inc. (HCBK) announced a $3.7 billion merger that was supposed to close by the second quarter of this year.
That process has now been delayed for the foreseeable future, as M&T announced on Friday that it has hired a consultant to help it respond to concerns from the Federal Reserve regarding compliance with the Bank Secrecy Act, especially as concerns procedures for spotting and preventing money laundering.
Regulators are reportedly not concerned about money laundering per se, so much as the strength of the mechanisms in place to detect and put a stop to it.
The acquisition would expand M&T’s reach to some 135 East Coast branches, expanding its overall network to a total of some 870 branches.
Despite the delay, both banks plan to move forward with their respective shareholder votes on the deal later in the month. Hudson’s shareholders will be compensated with 60 percent M&T shares and 40 percent cash. Both parties have agreed to extend the deadline for terminating the merger in the event that it is not yet complete from Jan. 31, 2014.
The sale price announced last August will not change.
M&T’s shares took a hit on the news, dropping 4.57 percent to $100.13, while Hudson City lost 5.47 percent to $8.29.
The deal would give M&T $109 billion in assets, $89 billion in loans, and $ 87 billion in deposits, which would propel it into the company of the nation’s top 15 biggest banks.
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