M&T Bank Corporation
) proposed acquisition of
Hudson City Bancorp Inc.
) for $3.7 billion cash and stock - the largest deal in 2012 -
has finally overcome all regulation hurdles. The Federal Reserve
had detected several loopholes in M&T Bank Corp.'s efforts to
fight money laundering in April and put a hold on the
acquisition. However, the bank was recently successful in
reaching an agreement with the Fed to improve compliance with
relation to risky activities.
HUDSON CITY BCP (HCBK): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
M&T BANK CORP (MTB): Free Stock Analysis
PNC FINL SVC CP (PNC): Free Stock Analysis
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The U.S. regulatory body had pointed out several discrepancies in
M&T Bank's risk-management agenda that were a violation of
federal anti-money-laundering regulations. The Fed also raised
questions about M&T Bank's internal controls, review of
probable high-risk customers, and supervision of foreign
correspondent accounts under its Wilmington Trust unit.
Moreover, the regulatory authorities have asked M&T Bank to
submit a new compliance program within 60 days to improve the
supervision of doubtful activities. Additionally, the company
also is required to hire an independent consultant to evaluate
all accounts and transactions associated with high-risk clients
in the second half of 2012.
In Aug 2012, M&T Bank agreed to take over Hudson City, which
would lead to an expansion of its franchise in the eastern U.S.
and give it the fourth largest deposit share in New Jersey. The
deal was projected to add around $25 billion in deposits and $28
billion in loans to M&T, subject to acquisition accounting
Following the financial crisis, the market witnessed a rise in
the number of distressed banks ready to be taken over by their
stronger counterparts. M&T Bank capitalized on many such
opportunities. In fact, strategic acquisitions have been a part
of M&T Bank's business enhancing policy. The deal will
provide many opportunities for M&T to boost its top line by
leveraging Hudson City's retail network as well as product and
balance sheet diversification.
On the other hand, with the interest rates remaining at
near-historic lows and stiff competition for mortgage loans due
to the involvement of government sponsored enterprises, it had
become increasingly difficult for Hudson City to grow its
M&T Bank's recent agreement with the Fed related to the risk
management measures shows the bank's steady progress in
completing the strategic merger, which would be beneficial to
M&T Bank currently carries a Zacks Rank #2 (Buy). Other major
banks worth a look include
JPMorgan Chase & Co.
The PNC Financial Services Group, Inc.
), both of which carry the same Zacks rank as M&T Bank.