Hudson City merger with MT clears another hurdle with Fed approval

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The Federal Reserve has approved the long-stalled merger of Paramus-based Hudson City Bancorp and M&T Bank, the banks announced, clearing the way for the transaction to be complete as soon as Nov. 1.The deal, which is more than three years in the making, is still pending approval by the New York State Department of Financial Services. But the Fed’s approval removes a major hurdle for a merger that has at times been valued at more than $5 billion, but held up over concerns about M&T’s compliance with the Bank Secrecy Act and its anti-money-laundering compliance programs.

It is the largest pending bank deal in the U.S. and would create the 14th-largest U.S. commercial bank, with combined assets of about $132 billion, according to Bloomberg Business. Hudson City and Buffalo, New York-based M&T had extended the deadline for the deal several times, most recently to Oct. 31, as they worked to address the federal government’s concerns.

“In 2012, Hudson City developed a strategic plan to transform into a community commercial bank,” Denis J. Salamone, Hudson City’s chairman and CEO, said in a prepared statement Wednesday. “When M&T approached us about a potential merger, we quickly realized that they had the business model we aspired to and that M&T could deploy it much more quickly for the benefit of our customers and the community.

“We also found their integrity and care for their customers was very similar to Hudson City’s values and culture. We believed it then and feel as strongly about it now.”

The news comes after Hudson City agreed last week to pay nearly $33 million to settle allegations about discriminatory lending practices in black and Hispanic neighborhoods. The bank denied the allegations by the Department of Justice and the Consumer Financial Protection Bureau, but said it wanted to avoid litigation so it could focus on “continuing to provide fair credit services to its customers and working to complete its pending merger with M&T Bank.”

Hudson City operates 135 branches, including 97 in New Jersey, the news release said. The sites will continue to operate under the Hudson City name as a division of M&T Bank until they are converted to M&T’s network, which is expected to occur in the first quarter of 2016. 

On Wednesday, M&T Chairman and CEO Robert G. Wilmers said the merger “will create a comprehensive banking franchise.”

“At M&T, we are deeply committed to the success of the customers and communities we serve, and we look forward to the opportunity to bring that strong commitment to Hudson City’s markets,” Wilmers said.  “M&T also brings a wider array of banking solutions and services.  As a thrift, Hudson City focused primarily on deposits and mortgages.” 

He added that he was gratified by the commitment of M&T employees “to strengthening and sustaining our risk and regulatory compliance programs as we position M&T for future growth.  We also thank the employees of Hudson City and the shareholders of both organizations for their patience as we have been doing this work.”