Hudson City, M&T Merger Hits Snag as Fed Raises Compliance Concerns

Michael Teague |

Hudson City, M&T Merger Hits Snag as Fed Raises Compliance ConcernsLast 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.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
HCBK Hudson City Bancorp Inc n/a n/a n/a 0 Trade
YYP.TEST null n/a n/a n/a 0 Trade
MTB M&T Bank Corporation 161.20 0.79 0.49 781,662 Trade

Comments

Emerging Growth

Immunovaccine Inc.

Immunovaccine Inc is clinical stage biopharmaceutical company. The Company develops products based on its proprietary vaccine enhancement platform in T cell activating therapies for cancer.

Private Markets

WayBetter

The spark hit Jamie when he saw co-workers competing to lose weight. Instead of pizzas and subs, they were eating salads and jogging along the river. Some were sneakily leaving…

Cross Campus

With over 500 members and operating 80,000 square feet by summer 2016, Cross Campus is one of the country’s top ten shared, collaborative office or "coworking" operators in the US.…