The top executive at M&T Bank Corp. told shareholders today that he takes "full responsibility" for issues relating to the bank's anti-money laundering compliance program and the subsequent delay of the Hudson City Bancorp Inc. acquisition.
Robert Wilmers, chairman and CEO of the Buffalo financial institution, described the situation as a "setback" that may be overcome once the bank improves the procedures, systems and processes of the Bank Secrecy Act and its anti-money laundering compliance.
"Although no situation was identified where M&T Bank may have been used as a conduit for money laundering, the scope and depth of our BSA/AML program must be enhanced before we can obtain regulatory approval for the proposed merger," Wilmers said. "Accordingly, we have commenced a major initiative, including the hiring of an outside consulting firm, intended to fully address the Federal Reserve's concerns."
M&T announced April 12 that it expects the pending acquisition of New Jersey's Hudson City Bancorp to be delayed because the Fed has identified regulatory issues with the bank's anti-money laundering compliance program. The bank has not specified the exact nature of the Fed's concerns, citing the confidentiality of discussions between the bank and the Fed. What's been made clear is that the bank must fix the issues before the Fed will approve the deal.
M&T and Hudson City have agreed to extend the termination date by which the parties must complete the $3.7 billion deal to Jan. 31, 2014, five months later than the original termination date.
"The delay is unfortunate," Wilmers said. "Nevertheless, I take this matter seriously and take full responsibility. Let me assure you that M&T's executive management, as well as our board of directors, is fully engaged and committed to resolving the BSA/AML matter and completing the Hudson City transaction."
In addition to hiring a consultant, M&T is also hiring more staff to help address the concerns. Wilmers could not say how many new employees are being brought on board.
Shareholders of M&T stock approved the planned acquisition today in a special meeting following the annual meeting. Shareholders of Hudson City are scheduled to vote April 18 on the deal.
M&T is the largest bank in Western New York, deposit-wise. Officials have not been able to provide an anticipated closing date for Hudson City, saying their main focus right now is to deal with the Fed's concerns.