The Federal Reserve today approved the acquisition of Hudson City Bancorp, Paramus, N.J., by the Buffalo, N.Y.-based M&T Bank Corporation. The deal, which would make M&T the 25th-largest U.S. bank with $132.5 billion in assets, is one of the largest approved in recent years. The deal languished in the approval process since it was first announced in August 2012 while the banks dealt with regulatory concerns about anti-money laundering compliance and fair lending.
In its order, the Fed made clear that banks must clear up supervisory problems before conducting M&A. “The Board expects that a banking organization will resolve all material weaknesses identified by examiners before applying to engage in expansionary activity,” it said, noting that since “M&T’s issues largely arose during processing of this application … the Board took the highly unusual step of permitting the case to pend while M&T addressed its weaknesses.
“The Board does not expect to take such action in future cases,” the Fed added. “Rather, in the future, if issues arise during processing of an application, the Board expects that a banking organization will withdraw its application pending resolution of any supervisory concerns.”