This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: Hudson Takeover by M&T Bank Still Bedeviled by Compliance Issues

NEW YORK (TheDeal) -- M&T Bank Corp.'s (MTB - Get Report) ability to close its acquisition of Hudson City Bancorp (HCBK - Get Report) by the end of January is being called into question as the Buffalo, N.Y.-based bank holding company continues to set up programs for compliance with the Bank Secrecy Act and anti-money laundering rules that pass muster with the Federal Reserve Board.

M&T, however, has not indicated plans to extend the current termination of Jan. 31, 2014 and a company spokeswoman said the company is still working toward the Jan. 31 close. The deal was originally scheduled to close in August 2013 but the date was pushed back in April of this year because of the Fed's review.

Several analysts have questioned the length of M&T's efforts to set up a compliance program that meets with Fed approval. They are puzzled about why a major bank holding company is having setting up what is a staple requirement of any large banking organization.

"It's surprising that it's taken this long for the Fed to sign off," said Bert Ely.

Must Read: The Deal: Orange Capital Squeezes Strategic Hotels

Todd Hagerman, an analyst with the Sterne Agee Group Inc., in an otherwise positive note addressing the outlook for the deal, predicted it would close in the second quarter. A close that late in 2014 would require another extension of the termination date. Hagerman said recent declines in M&T shares due to the uncertainty present an opportunity and issued a buy recommendation on the stock. "Outstanding regulatory and renewed legal concerns, together with the uncertainty surrounding the announced [Hudson] acquisition, have weighed on M&T" but "we continue to believe the acquisition will likely close in 2Q14"

M&T entered into a $5.2 billion merger agreement with Hudson City in August 2012. The deal has been stalled since April because of the Fed's concerns about M&T's compliance program. M&T, which has aggressively pursued acquisitions, has not said in what operations those problems lie.

M&T entered a consent order with the Fed in June that laid out obligations for the bank's compliance programs.

Hagerman discounted the impact of separate ongoing investigations by the Securities and Exchange Commission and the Department of Justice into financial reporting and securities filing practices by Wilmington Trust Corp. before its acquisition by M&T. M&T has said that counsel for Wilmington Trust have discussed a possible resolution with SEC officials.

Hagerman said the SEC inquiry won't stand in the way of the Hudson deal. "The longstanding SEC investigation surrounding . . . Wilmington Trust is unlikely to adversely impact . . . regulatory approval" for the Hudson acquisition, he wrote. "We believe the legacy issues evident prior to MTB's acquisition of Wilmington remain manageable and are unlikely to affect an acquisition. Moreover, we are unaware of any regulatory precedent that would potentially derail the transaction."

On M&T's Oct. 17 earnings call, CFO Rene Jones said, "We have a lot of work left to do" to make sure the Fed accepts the reworked compliance program. He noted that the process involved building state of the art practices, rather than simply fixing a weakness in the system.

-- Written by Bill McConnell In Washington

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
HCBK $10.27 -0.39%
MTB $130.65 -0.38%
AAPL $118.44 -2.36%
FB $94.14 0.14%
GOOG $631.21 0.90%

Markets

Chart of I:DJI
DOW 17,598.20 -91.66 -0.52%
S&P 500 2,098.04 -5.80 -0.28%
NASDAQ 5,115.3820 -12.8990 -0.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs